Falling jobless claims point to US economy on the mend

WASHINGTON: The fall in the number of Americans filing first-time jobless claims in mid-December is seen as a sign that the economy remains on the mend.

''There's no other way of reading this,'' said Ms Astrid Adolfson, an economist at MCM MoneyWatch in New York.

Applications for state unemployment insurance declined a surprising 28,000 to a seasonally adjusted 332,000 in the week ended December 19, the lowest level in three weeks, the Labour Department said.

That followed a gain of 12,000 to 360,000 the previous week.

Private analysts surveyed had anticipated a decrease of 9,000 claims to 351,000 in the latest reporting week.

''In one fell swoop, new claims have dropped to within whispering distance of the 354,000 weekly average that prevailed during the 1983-90 business cycle expansion,'' said Mr Frederick Sturm, an economist at Fuji Securities in Chicago.

The four-week moving average, a less volatile barometer of employment conditions, tumbled to 341,250, the lowest since the week ended November 25, 1989, the government said.

However, an additional 24,625 workers in 49 states filed new claims under a separate federal programme providing extended unemployment benefits in the week ended December 19. This means the underlying level of total claims was about 353,000, Mr Sturm said.

The report indicates that the worst effects of the recession have probably passed. Stone & McCarthy Research Associates said the hefty decline in unemployment insurance claims suggested the US economy added 100,000 new jobs during December.

''The data that accumulates on a daily basis shows that the economy is improving,'' the firm said.

Nevertheless, many big companies, including IBM, General Motors and Sears, Roebuck & Co, are planning to slash their payrolls this year.

Twenty-seven states and territories reported decreases in jobless claims in the week ended December 19, led by California and Michigan.

Twenty-six states reported increases, led by Pennsylvania and Virginia.

In other economic news, the Commerce Department said factory orders dropped a larger than expected 0.9 per cent in November to a seasonally adjusted US$242.55 billion, the biggest dip in three months.

Almost all of the decline was in orders for big-ticket durable goods, particularly the volatile category of aircraft and parts, which dropped by more than 39 per cent in November. Bloomberg