New claims for jobless benefits increase sharply for second week in a row

WASHINGTON - New claims for unemployment insurance shot up for the second week in a row, suggesting many U.S. workers are still suffering from an economy that is trying to claw its way out of a recession.

For the work week ending Dec. 29, new claims for jobless benefits jumped by a seasonally adjusted 36,000 to 447,000, the highest level since the beginning of December, the Labor Department reported Thursday.

The week before, new claims rose by 26,000, according to revised figures. That was a much bigger increase than the 7,000 gain previously reported.

A government analyst offered no specific reason for the big increases but noted that new claims tend to be volatile during the holiday season.

The more stable four-week moving average of claims, which smoothes out week-to-week fluctuations, declined last week to 409,750, the lowest level since Sept. 1. It marked the fourth straight week that the moving average fell.

To cope with the ailing economy, which fell into recession in March, companies have cut production, trimmed hours and let workers go.

A spate of recent economic reports, however, provided some signs that the recession might be bottoming out.

On Wednesday the Institute for Supply Management reported that a rise in new orders to factories helped push its key gauge of manufacturing activity higher in December.

Reports released last week showed that consumer confidence rebounded in December, home sales surged in November and demand for many big-ticket items posted gains in November.

Yet, even against this encouraging backdrop, many economists say the nation's unemployment rate -- a lagging economic indicator -- will continue to rise in the coming months because companies will be reluctant to hire back workers.

The jobless rate jumped to 5.7 percent in November. Many economists predict that when the government releases the employment report for December on Friday, it will show the jobless rate climbed to at least 5.8 percent. They also are forecasting job losses during the month to total around 150,000 to 175,000.

To revive the economy, the Federal Reserve cut interest rates 11 times in 2001. Many economists believe those rate reductions will help the economy stage a recovery by the spring. Economists say the jobless rate could top out at close to 7 percent by that time.