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Jobless Claims Drop, Defying Pessimists

The latest initial claims unemployment data is in, and it is better than many expected, giving further credence to arguments that the employment outlook will buoy recovery in Q1 2010.



) -- Initial jobless claims dropped by 22,000 in the week ending Dec. 26, defying a market expectation that claims would rise by 8,000 to a level of 460,000. The better-than-expected drop in initial claims from 454,000 to 432,000 brings the four-week moving average to 460,250.

The latest jobless data continues the recent positive trend, with claims having dropped in the past two months. Recent hopes that there may be a net increase in jobs as soon as January or February should receive a further boost from the latest positive data. What's more, the unexpectedly large decline brings initial claims ever-nearer the 425,000 level that some economists have pegged as the indicator that the economy is actually adding jobs.

Claims have dropped by 80,000, or 15%, since late October. Last week's total of 452,000 was the lowest initial claims level since September 2008. There were 717,000 initial claims in the comparable week in 2008. The four-week initial claims level was also down 5,500 from the previous week's revised average of 465,750.

The unemployment rate was 3.9% percent, during the week ending Dec. 19, a decrease of 0.2% from the prior week. The number for persons claiming unemployment benefits in state programs totaled 5,090,652, a decrease of 254,815 from the preceding week. A year earlier, the rate was 3.4% and the volume was 4,572,637.

The highest insured unemployment rates in the week ending Dec. 12 were in Alaska (7.4 %), Oregon (6.1%), Puerto Rico (5.8%), Wisconsin (5.6%), Michigan (5.5%), Idaho (5.4%), Montana (5.4%), Nevada (5.4%), Pennsylvania (5.4%), and California (5.3&).

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The largest increases in initial claims for the week ending Dec. 19 were in Michigan (+8,382), California (+7,317), Florida (+3,179), Iowa (+2,820) and Missouri (+1,628), while the largest decreases were in Tennessee (-2,972), Illinois (-2,923), Pennsylvania (-2,875), Georgia (-2,684) and North Carolina (-1,771).

-- Reported by Eric Rosenbaum in New York.

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