Unemployment Benefits Have Slightly Declined

The number of Americans filing new unemployment benefit claims only declined slightly, suggesting that the labor market is still struggling. Initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted number of 387,000 according to the Labor Department. The four week moving average for new claims, which is considered a better measure of labor market trends, increased 3,500 to 386,250, which is the highest level since early December.

The weakness in the labor market prompted the Federal Reserve to further ease monetary policy by extending a program to re-weight bonds it already holds toward longer maturities to hold down borrowing costs. Much of the recent weakness in the job market has been caused by a decline in hiring, as opposed to increased layoffs. New applications for unemployment benefits have barely moved since April.

The number of people still receiving benefits under regular state programs after an initial week of aid was unchanged at 3.3 million in June. The number of people on extended benefits fell 25,638 to 110,864 in June, as more states lost eligibility for extended benefits for the long-term unemployed.

Economists predict that as more people fall off the unemployment benefits rolls, that will push down the jobless rate as they are forced to take jobs they would not normally have considered or that they will drop out of the labor force. A total of 5.83 million people were claiming unemployment benefits in June under all programs, down 1,164 from the previous week.

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