U.S. weekly jobless claims fall 5,000 to 381,000 UPDATE - Forbes.com

WASHINGTON (Thomson Financial) - The number of individuals filing new claims for unemployment insurance fell slightly in the latest week, but remain high enough to suggest the labor market is still in contraction, economists say.

The number of first-time claims filed in the week ending June 14 fell by 5,000 to 381,000. Economists polled by Thomson Reuters IFR Markets were expecting claims to fall further, to 375,000.

Despite the smaller-than-expected decline in the latest week, the level of initial claims are still in recession territory, 'at least if the experience of 2001 is a guide,' said Ian Shepherdson of High Freqency Economics. He noted that the eight-week moving average of claims in early March -- the very beginning of the recession in that year -- totalled just 362,000, with claims rising rapidly thereafter.

Shepherdson says he doesn't expect that to happen in the current downturn, 'but the key point here is that the pace of layoffs is now quite high, with no prospect of any reversal or even a levelling-off in the near future.'

Even so, claims 'remain low enough to suggest the contraction in the economy has thus far been shallow,' said Tony Crescenzi of Miller Tabak.

Meanwhile, the four-week moving average for initial claims increased by 3,250 to 375,250, the highest level since April 12. Economists prefer the four-week moving average because it smooths out fluctuations in weekly data.

'The slow and steady creep of the four-week moving average inside the claims series does not imply at this point that the claims series will see a positive correction in the aftermath of the settlement of the American Axel strike,' said Joseph Brusuelas of Merk Investments.

The massive strike at the General Motors (nyse: GM - news - people ) auto parts dealer had contributed to a rise in claims earlier this year.

For the week ending June 7, the number of individuals continuing to receive unemployment insurance fell by 76,000 to 3.060 million, the lowest level since April 26. Economists were expecting claims to increase to 3.150 million from the preceding week's originally reported 3.139 million. That figure has been downwardly revised by 3,000 claims.

'While the big drop in continuing claims is positive news, there is no clear evidence yet that continuing claims are levelling off,' said Abiel Reinhart of JPMorgan Chase (nyse: JPM - news - people ).

The four-week moving average for continuing unemployment claims decreased by 2,000 to 3.096 million.

tessa.moran@thomsonreuters.com

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