By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) - The number of people filing initial claims for state unemployment benefits fell by 20,000 to a seasonally adjusted 512,000 in the week ending Oct. 31, the Labor Department reported Thursday.
It was the first decline in two weeks. It's the fewest initial claims since early January. Initial jobless claims have been above 500,000 for 51 straight weeks.
The figures come one day before the Labor Department reports on the October employment rate. Economists surveyed by MarketWatch expect nonfarm payrolls to fall by 150,000 in October, and for the unemployment rate to rise to 9.9%.
The four-week average of initial claims fell by 3,000 to 523,750, also the lowest since January. The four-week average smoothes out quirks due to one-time events, such as bad weather, holidays or strikes.
Economists surveyed by MarketWatch expected initial claims to fall to about 520,000. The level of initial claims in the week ending Oct. 24 was revised up by 2,000 to 532,000. See Economic Calendar.
Continuing state claims fell by 68,000 to a seasonally adjusted 5.75 million, the lowest since March. The insured unemployment rate (the proportion of covered workers who are collecting state benefits) was unchanged at 4.4%. Read the full report.
Compared with a year ago, initial claims are up 9%, while continuing claims are up 55%.
Because unemployment is so high and so persistent, the federal government has created programs to provide extended benefits beyond the typical 26 weeks. The number of people collecting extended federal benefits rose by 117,000 to 4.08 million, not seasonally adjusted.
Including those federal programs, the number of people claiming benefits of any kind in the week ending Oct. 17 was 9.53 million, not seasonally adjusted, up 136,000 from 9.36 million in the previous week.
The decline in continuing state claims in the past few months could show that companies are more willing to hire, or it could mean that more people were exhausting their benefits and moving into the extended federal benefits program, which is reported separately. Typically, people are eligible for 26 weeks of regular state unemployment benefits.
Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new jobs. The jobless claims report shows businesses are still laying off workers at a rapid rate, and finding a replacement job is extremely difficult for those who've lost work. The unemployment rate rose to a 26-year high of 9.8% in September.
Benefits are generally available for those who lose their full-time job through no fault of their own. Those who exhaust their unemployment benefits are still counted as unemployed if they are actively looking for work.
More than half of those collecting state benefits ultimately exhaust their regular state benefits before finding work, usually after receiving checks for 26 weeks. In September, the exhaustion rate was 52%, the highest on record dating back to 1972.
In September, a record 5.4 million people had been unemployed for longer than six months, according to the separate household survey of employment.
Many of those who exhaust their state benefits are eligible to collect under special federal programs, for a maximum total of 79 weeks. The government does not report regularly on the number of people who've exhausted their extended federal benefits.
A private advocacy group has estimated that 400,000 people exhausted their eligibility for extended benefits in September, and 1.5 million will exhaust their extended benefits by the end of the year. The extended benefit program won't take any new claims after the first of the year.
The Senate approved legislation on Wednesday to extend benefits for up to 20 additional weeks in the hardest-hit states.
