New Jobless Claims Fall More Than Expected

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Time

The number of newly laid-off workers seeking unemployment benefits fell more than expected last week to the lowest total in a month, a sign the job market may be improving.

The Labor Department said that first-time claims for unemployment insurance dropped by 43,000 to a seasonally adjusted 440,000. Wall Street economists expected a smaller decline of 15,000, according to a survey by Thomson Reuters. See TIME's special "Out of Work in America."

The jobless claims report was the first of the year that wasn't affected by a holiday backlog. The easing of the backlog had elevated the numbers for the previous three weeks. The latest figures likely provide a clearer picture of the job market.

And they raise some hopes for the economic rebound. "The recovery is slowly taking root," Diane Swonk, chief economist at Mesirow Financial, wrote in a research note.

Still, she added, "Any gains we see are likely to remain muted given the depth of the losses we endured, especially when it comes to jobs."

And the jobs outlook is about to get muddy again.

The unemployment claims numbers for this week that will be reported next week will likely be affected by the closing of businesses and government offices due to the snowstorms in the Mid-Atlantic region. See how Americans are spending now.

This week is also the period when the government gathers information for the February report on the unemployment rate and employer payrolls. The severe weather may distort those figures, too, economists said. That could make it hard to get an accurate picture of the job market for several weeks.

The snowstorms could cost the economy more than 100,000 jobs in February, according to Carl Riccadonna, senior U.S. economist at Deutsche Bank. Construction companies and retailers may hire fewer people. And government hiring for the 2010 Census could also be delayed, he said.

The weather will likely disrupt other economic indicators, in addition to employment data. These include retail sales, industrial production, housing starts and construction spending. "It's going to throw a monkey wrench into the whole forecasting process," Riccadonna said.

Economists may have to wait until March figures are reported in April to get a more true picture of the economy.

Still, severe weather events don't generally knock the economy off track, Riccadonna said. So any declines in February will likely be reversed in March. See 10 big recession surprises.

The four-week average of jobless claims fell by 1,000 to 468,500. It was the first drop after three weeks of increases. Many economists say the four-week average would need to fall consistently below 425,000 to signal that the economy will start generating net job gains.

First-time claims are now close to the low levels they reached in late December, when they dropped to their lowest point in nearly 18 months.

Still, jobs remain scarce. The Labor Department said last week that the unemployment rate fell to 9.7 percent from 10 percent. But most analysts expect it to remain near 10 percent through the end of the year.

The Obama administration estimated Thursday that the economy will generate an average of 95,000 jobs a month this year. That wouldn't be enough to drive down the jobless rate, which the administration predicts will stay near 10 percent through year's end.

Employers cut a net total of 20,000 jobs in January, the Labor Department said last week.

Obama needs to pull off something this year or make it clear it's not his fault.