2010.07.2910:13:00UTC+00Weekly Jobless Claims Show Modest Drop But Remain Elevated

After releasing a report last week showing a notable increase in first-time claims for unemployment benefits, the Labor Department released a report Thursday morning showing a modest decrease in initial jobless claims in the week ended July 24th.

The report showed that jobless claims dropped to 457,000 from the previous week's revised figure of 468,000. Economists had been expecting jobless claims to edge down to 460,000 from the 464,000 originally reported for the previous week.

Despite the decrease, jobless claims remain well above the 400,000 level and well off the two-year low of 427,000 that was set in earlier in the month.

Peter Boockvar, equity strategist at Miller Tabak, said, "GM not shutting auto plants as is typical this time of the year is still a distortion but it is surprising that claims aren't lower because of it and thus current levels still remain a concern at this stage of an economic recovery."

The Labor Department also said that the less volatile four-week moving average fell to 452,500 from the previous week's revised average of 457,000.

Meanwhile, the report also showed that continuing claims, a reading on the number of people receiving ongoing unemployment help, rose to 4.565 million in the week ended July 17th from the preceding week's revised level of 4.484 million.

Extended benefits showed a net decrease of 269,000 in the week ended July 10th, although the decrease continued to reflect the lack of benefit extension legislation at the time.

With the bill extending unemployment benefits being passed by Congress and signed by President Obama since then, Boockvar predicted that the drop in extended benefits will reverse in the next week or two.

Republicans successfully blocked passage of the unemployment benefits extension several times, arguing that the bill's $34 billion price tag should be offset by cuts in other areas.

Next Friday, the Labor Department is scheduled to release its report on the employment situation in the month of July as a whole.

Economists currently expect the report to show the loss of about 116,000 jobs following a decrease of 125,000 jobs in June. The unemployment rate is also expected to edge up to 9.6 percent from 9.5 percent in the previous month.

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