In a surge not foreseen by economists, new applications for unemployment benefits rose by 1,000 in the week ending Dec. 22 and the number of long-term unemployed workers jumped to its highest level in more than two years, the Labor Department reported Dec. 27.
Largely driven by a slowdown in the housing sector as construction companies and mortgage lenders laid off workers, initial unemployment claims grew to 349,000 in the week before Christmas.
As a result of this, other companies are getting nervous to hire and finding a job is getting more difficult, as seen in the number of people continuing to collect unemployment benefits, which jumped by 75,000 to 2.71 million in the week that ended Dec. 15. This is the biggest jump since November 2005.
Economists had forecasted new and existing unemployment claims to fall, not rise at the year's end. However, they prefer to look at the four-week moving average because it smoothes out weekly data fluctuations. The four-week moving average for initial claims did fall by 1,000 to 342,500 on Dec. 27.
Many economists see the 350,000 mark as indicative of a weakening job market, and a sign that the economic slowdown will continue through the early months of 2008.
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