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Mixed picture in jobless benefits

Claims rise 12,000, more than expected, but firms seem hesitant to cut as holiday shopping nears.

November 23, 2006|From the Associated Press

Newly laid-off workers signed up for unemployment benefits at a faster pace last week yet companies still seemed wary of pruning too much as economic activity slowed.

New applications filed for the workweek that ended Saturday rose a seasonally adjusted 12,000 to 321,000, the Labor Department reported Wednesday.

Even though the increase left claims at a three-week high, the figures were considered consistent with a reasonably healthy jobs climate despite the strain of losses related to a cooling housing market.

The current number of new filings for unemployment benefits is in line with data from last year at this time, when claims stood at 322,000.

Economists had forecast a smaller rise last week, to around 310,000.

"Despite the larger than expected increase in jobless claims, businesses are reluctant to dismiss workers ahead of the upcoming holiday season," said Richard Yamarone, economist at Argus Research Corp. "Demand for goods and services appears to be quite strong, which should keep employers in a hiring mode."

Still, there have been pockets of pain. The struggling auto industry has slashed jobs. Companies involved in home building, furniture making and real estate have let workers go. Retailers are also laying off employees.

The four-week moving average of jobless claims, which smooths out week-to-week fluctuations, rose 3,000 last week to 317,000. That marked the highest level since late August.

For the same week last year, the moving average stood at 316,750.

The report also said that the number of people continuing to collect unemployment benefits grew by 14,000 -- to 2.45 million -- for the week ending Nov. 11, the most recent period for which information is available.

The University of Michigan's survey of consumer sentiment fell to 92.1 this month -- down from October's 93.6 and below analysts' expectations. The drop occurred despite lower oil prices.

The unemployment rate sank to a five-year low of 4.4% in October, and workers' wages grew solidly, the government reported this month.

Economic growth slowed to a 1.6% annual rate in the July-to-September quarter, the worst pace in more than three years. The housing slump was the biggest factor.

Many analysts think the Federal Reserve is likely to leave interest rates unchanged at its next meeting, on Dec. 12.

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