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New jobless claims drop last week but remain high

WASHINGTON (AP) - New claims for unemployment benefits dropped
sharply last week, signaling that layoffs are slowing but not
enough to signal strong job creation.

The Labor Department said Thursday that requests for jobless aid
dropped by 21,000 to a seasonally adjusted 454,000. The decline
takes claims to their lowest level since early May, erasing the
increases of the last two months.

But even as first-time claims fall, the number of unemployed
Americans receiving benefits is dropping sharply because their aid
is ending.

About 350,000 people saw their benefits cut off in the week of
June 19 after Congress left for weeklong recess without extending
federal jobless aid. That brings the total to about 1.6 million
people who have had their benefits end since May. Those numbers
could reach 3.3 million by the end of the month if Congress doesn't
pass an extension when it returns from recess.

Initial claims have fluctuated in recent weeks. They have
remained stuck near 450,000 all year, after dropping steadily last
year from a peak of 651,000 in March 2009.

The four-week average of claims dropped slightly to 466,000. In
a healthy economic recovery with rapid hiring, claims usually fall
below 400,000.

The tally of people continuing to claim benefits plunged by
224,000 to 4.4 million, the department said.

But that doesn't include another 4.6 million people who received
extended benefits paid for by the federal government in the week
ended June 19, the latest data available.

The number of people receiving extended benefits is dropping
quickly. During the recession, Congress added up to 73 weeks of
extra benefits on top of the 26 weeks typically provided by states.

But those extensions expired in late May, leaving about 1.6
million people without unemployment insurance, according to the
Labor Department. That figure is expected to grow to 3.3 million by
the end of this month.

Democrats in the House and Senate are seeking to renew the
extended benefits and continue them through November. But Senate
Republicans have blocked the extension, citing deficit concerns.

(Copyright 2010 by The Associated Press. All Rights Reserved.)


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