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Unemployment Claims Drop

Updated:
WASHINGTON (AP) _ The number of laid-off workers filing for unemployment benefits dropped sharply last week after having been driven higher the previous week by storm-related layoffs.

The Labor Department reported that applications for jobless benefits totaled 332,000 last week, down by 27,000 from the previous week.

The prior week jobless claims had jumped by 46,000, the biggest one-week surge since September 2005 in the aftermath of Hurricane Katrina. Part of that big increase occurred because of winter storms which boosted layoffs in such industries as construction.

The four-week moving average for claims edged up from 326,700 to 328,000, the highest level for this average since early December.

The nation's unemployment edged up to 4.6 percent in January, the highest level in four months, and economists believe that rate will rise further perhaps as high as 5 percent in coming months as a slowing economy increases layoffs. Already the slump in housing and weakness in auto manufacturing are triggering layoffs in those industries.

Nevertheless, a seasonally adjusted civilian jobless rate of 4 percent to 5 percent is low by historical standards.

The hope of the Federal Reserve is that a two-year campaign to raise interest rates will work to slow the economy enough to keep inflation under control.

While overall inflation has eased as energy prices have retreated from last year's highs, the government reported Wednesday that core inflation, which excludes volatile energy and food, jumped by 0.3 percent in January, a bigger-than-expected increase that was driven by a huge jump in medical costs.

If these inflation pressures persist, analysts said the Fed will be forced to resume raising interest rates.

The increase of 46,000 claims for the week ending Feb. 10 reflected the fact that 29 states and territories saw claims increase while 24 saw a decrease in claims.

States with the biggest increases were Pennsylvania, up 7,657, a rise attributed to increased layoffs in construction, service and manufacturing industries; Ohio, up 5,282, because of higher auto layoffs, and Wisconsin, up 4,926, with higher layoffs in construction, manufacturing and service industries.

The state with the biggest drop in jobless applications was California, where claims fell by 1,070, a decline attributed to fewer layoffs in construction and service industries.
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