Jobless Claims Fall Steeper Than Expected

NEW YORK (TheStreet) -- The number of people claiming unemployment benefits for the first time last week dropped to 502,000, the smallest figure recorded since January, the Labor Department said Thursday.

The week-to-week decline -- 12,000 fewer claims compared to last week's revised number -- was sharper than the drop of 2,000 that economists were expecting.

The four-week moving average, which helps level out volatilities inherent in the jobless-claim gauge, fell by 4,500 to 519,000. Since hitting highs in April, the number of out-of-work people on the government doles has declined, albeit at a slow pace. Thursday's drop was the ninth straight.

Still, layoffs continue to mount. Wednesday evening, Applied Materials(AMAT Quote) easily beat quarterly profit expectations, but also announced that it planned to cut as many as 1,500 jobs. And over the last week, drug giants Pfizer(PFE Quote) and Merck(MRK Quote) both said they planned to make thousands of layoffs as they go through their respective mega-mergers -- the Pfizer-Wyeth tie up expected to induce 20,000 job cuts, and Merck-Schering-Plough 16,000.

Some analsyts believe that the weekly jobless claim figure must reach 450,000 before the economy is truly creating new jobs.

-- Written by Scott Eden in New York

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