Christopher S. Rugaber
AP Economics Writer
Washington — The total number of people on the unemployment insurance rolls dropped for the first time since early January, the government reported Thursday, while new claims for benefits rose slightly.
The report shows job losses are easing after companies made deep cuts earlier this year. But it’s not clear whether recipients of unemployment insurance are finding new jobs or simply using up all their benefits, which typically last 26 weeks.
The Labor Department reported the total unemployment insurance rolls fell by 148,000 to 6.69 million in the week ending June 6, the largest drop in more than seven years.
The drop also breaks a string of 21 straight increases in continuing claims, the last 19 of which were records. A dip in continuing claims several weeks ago was later revised higher.
Initial claims rose by 3,000 to a seasonally adjusted 608,000 in the week ending June 13, above analysts’ expectations. The four-week average, which smoothes fluctuations, fell by 7,000 to 615,750. Continuing claims data lags initial claims by one week.
The four-week average is at its lowest level since mid-February, further evidence that the pace of job cuts is slowing.
In another encouraging sign, the Conference Board on Tuesday reported its index of leading economic indicators rose for the second consecutive month in May after seven straight declines. Conference Board economist Ken Goldstein said if those trends continue, a “slow recovery” should start before the end of the year, but he cautioned that the job market will take longer to rebound.
The drop in continuing jobless claims likely reflects the decline in first-time claims, meaning that fewer people are joining the rolls.
The drop, economists said, also could signal a slowing in the rise of the unemployment rate, which reached a 25-year high of 9.4 percent in May. Many economists forecast the rate could reach 10 percent by the end of the year.
Millions of Americans are receiving unemployment compensation under an emergency federal program authorized by Congress last summer and extended by the Obama administration’s stimulus package.
About 2.4 million people received benefits under that program in the week ending May 30, an increase of more than 102,000 from the previous week. That’s in addition to the 6.7 million people receiving benefits under the 26-week program typically provided by states.
Economists are watching closely the level of first-time claims for signs the economy will recover by mid-summer, as many analysts predict.
The four-week average of claims has dropped by about 40,000 from nearly 659,000 in early April, its peak for the current recession.
But many economists want to see it fall further. Bruce Kasman, chief economist at JPMorgan Chase & Co., said Tuesday a drop in the four-week average to 580,000 by next month would be sufficient to declare the recession over.
Kasman is chairman of the American Bankers Association’s economic advisory committee, a group of economists for large banks that this week predicted the economy will recover in the third quarter. The Federal Reserve also expects the economy to begin growing again this year.
First-time jobless claims are a measure of the pace of layoffs and are seen as a timely, if volatile, indicator of the economy’s health. Initial claims stood at 390,000 a year ago.
Among the states, Pennsylvania reported the largest increase in initial claims for the week ending June 6. It attributed the increase of 6,861 claims to layoffs in the construction, service and transportation industries.
The next largest increases were in Florida, Ohio, California and New York.
Arkansas had the largest decrease of 1,206, which it attributed to fewer layoffs in the auto industry. The next largest drops were in Puerto Rico, Wisconsin, Arizona and Nebraska.