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New Claims For Unemployment Drop

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Feb 7, 2008 8:00 am US/Eastern

New Claims For Unemployment Drop

CBS News Interactive: Eye On The Economy

CBS News Interactive: On The Job

WASHINGTON (AP) ―

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The number of newly laid off workers filing applications for unemployment benefits dropped last week, but not enough to indicate that strains on the labor market are easing.

The Labor Department reported Thursday that 356,000 claims for jobless benefits were filed last week, a decline of 22,000 from the previous week. The decline only erased a part of the huge jump of 72,000 in claims of the previous week.

The four-week average for jobless claims rose to 335,000, which was the highest level in a month.

A severe slowdown in economic growth that has raised concerns about a possible recession has begun to affect the labor market. The government reported last week that the economy shed 17,000 jobs in January, the first monthly job loss in more than four years.

Many economists believe that the current quarter will be the maximum danger point for the economy to slip into a recession, which would be the first downturn since 2001.

Those fears were increased on Tuesday when the Institute for Supply Management reported a startling contraction in the service sector, triggering a 370-point drop that day in the Dow Jones industrial average.

On Wednesday, Macy's reported disappointing sales results for January and announced that it was cutting 2,300 jobs, adding to worries that the current economic slowdown is spreading.