By Timothy R. Homan and Shobhana Chandra Dec. 11 (Bloomberg) -- The number of Americans filing first- time claims for unemployment benefits surged more than forecast last week to a 26-year high, a sign companies are stepping up firings as the recession deepens. Initial jobless claims increased 58,000 to 573,000 in the week ended Dec. 6, the highest since November 1982, from a revised 515,000 the previous week, the Labor Department said today in Washington. The number of workers staying on benefit rolls gained to 4.429 million, the most since December 1982. Employers are slashing payrolls as consumers retrench and credit stays frozen. Mounting job losses and falling home prices increase the likelihood that the U.S. recession will extend well into 2009, pressuring President-elect Barack Obama to push Congress for economic stimulus. ``The labor market is facing its worst crisis since 1982, and it is certainly not over yet,'' Harm Bandholz, a U.S. economist at UniCredit Markets and Investment Banking in New York, said before the report. ``One of the most important tasks of the newly elected government is, therefore, to help distressed homeowners and to stimulate the labor market.'' Jobless claims were estimated to rise to 525,000 from the 509,000 initially reported the previous week, according to the median projection of 39 economists in a Bloomberg News survey. Estimates ranged from 485,000 to 555,000. Continuing claims were projected to rise to 4.1 million, according to the survey. Four-Week Average The four-week moving average of initial claims, a less volatile measure, rose to 540,500, the highest since December 1982, from 526,250, today's report showed. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, increased to 3.2 percent, the highest since August 1992, from 3.1 percent. These data are reported with a one-week lag. Eleven states and territories reported an increase in new claims, while 42 reported a decrease. The biggest increases were reported by Wisconsin and Iowa. Jobless claims reflect weekly firings and tend to rise as job growth -- measured by the monthly non-farm payrolls report - - slows. Last week's gain in initial filings was the biggest one-week advance since September 2005, the report showed. The week after the Thanksgiving holiday tends to be the busiest of the year for first-time filings, a Labor spokesman said today. The economy has lost 1.9 million jobs so far this year as payrolls dropped for 11 consecutive months. U.S. companies eliminated 533,000 jobs in November, the most since 1974, and the unemployment rate increased to a 15-year high of 6.7 percent, the government said last week. 2008 Job Cuts So far this year, weekly claims have averaged 412,000, compared with an average of 321,000 for all of 2007, when employers added a total of 1.1 million jobs. Rising unemployment and the persistent credit crisis raise the likelihood the recession that began in December 2007 will turn into the longest slump in the postwar era. The U.S. economy contracted at a 0.5 percent annual pace in the third quarter. Companies are slashing jobs as demand weakens and the credit crisis deepens. Dow Chemical Co., the largest U.S. chemical maker, said this week it will cut 5,000 jobs and reduce the company's contractor workforce by about 6,000. ``We are accelerating this move given the deterioration of the global economy and most of our markets,'' Andrew Liveris, chief executive officer of the Midland, Michigan-based company, said on a Dec. 8 conference call with analysts. ``The entire industrial supply chain all the way to whatever the consumer buys outside of food and health is in a recessionary mode.'' To contact the reporters on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net Shobhana Chandra in Washington schandra1@bloomberg.net

Source