The number of U.S. workers filing first-time claims for unemployment benefits unexpectedly declined last week, pointing to a labor market that is on the mend. Applications for jobless insurance payments decreased by 3,000 to 420,000, the lowest in three weeks, Labor Department figures showed today. Economists surveyed by Bloomberg News projected an increase in claims to 425,000, according to the median forecast. The total number of people receiving unemployment insurance and those getting extended payments rose. Fewer firings signal employers may be gearing up to add to their payrolls and help reduce a jobless rate hovering near a 26-year high. While the economy is gaining momentum heading into 2011, Federal Reserve policy makers said this week it isn’t strong enough to reduce unemployment. “The underlying trend appears to be lower, and that’s consistent with some improvement in the labor market,” Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, said before the report. “The recovery is still intact, but it’s really not strong enough yet to push the unemployment rate down significantly.” Estimates in the Bloomberg survey of 48 economists ranged from 405,000 to 435,000. There were no special factors in last week’s decrease, a Labor Department official said as the figures were released today. The four-week moving average, a less-volatile measure, decreased to 422,750, the lowest since the week ended Aug. 2, 2008, from 428,000. Continuing Claims The number of people continuing to collect jobless benefits rose by 22,000 in the week ended Dec. 4 to 4.14 million. They were forecast to increase to 4.12 million, according to the Bloomberg survey. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments increased by 324,537 to 4.83 million in the week ended Nov. 27. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.3 percent in the week ended Dec. 4, today’s report showed. Forty-six states and territories reported an increase in claims, while seven had a decrease. More help may be coming for the unemployed. The Senate yesterday passed an $858 billion tax-cut plan, crafted by President Barack Obama and Republicans that extends Bush-era reductions for all income levels. It also continues expanded unemployment insurance benefits through 2011. Benefits Extension Under current legislation, the extension in emergency benefits expired Nov. 30, which the Labor Department has estimated would interrupt aid to 1.36 million before the last week of 2010. Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates. That relationship has broken down in recent months as some companies cut staff and others expand -- pointing to an uneven recovery. The U.S. added 39,000 jobs in November, fewer than forecast, while the jobless rate rose to 9.8 percent, the highest since April, the Labor Department reported Dec. 3. The Fed’s Open Market Committee said in a statement Dec. 14 following their last meeting of the year that the recovery has been “disappointingly slow.” Fed on Economy The expansion is “continuing, though at a rate that has been insufficient to bring down unemployment,” central bankers said. “Household spending is increasing at a moderate pace, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.” United Technologies Corp., the maker of Pratt & Whitney jet engines and Carrier air conditioners, has pared costs by cutting at least 18,000 jobs in the past two years to help speed profit growth as the economy improves. “Consumer spending remains in my view, the driver for recovery as we move forward,” Louis Chenevert, chief executive officer of Hartford, Connecticut-based United Technologies, said at an analysts’ meeting on Dec. 9. “Consumer confidence has improved since the downturn but remains low,” he said. “Unemployment is stubbornly high at roughly 10 percent, and I would say job growth remains fairly elusive at this point in time.” To contact the reporter on this story: Alexander Kowalski in Washington at akowalski13@bloomberg.net To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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