The number of applications for unemployment benefits unexpectedly dropped last week to the lowest since April 2008, a sign that the U.S. labor market is strengthening heading into 2012. Jobless claims fell by 4,000 to 364,000 in the week ended Dec. 17, Labor Department figures showed today in Washington. The median forecast of 45 economists surveyed by Bloomberg News projected an increase to 380,000. A consistent slowdown in firings lays the foundation for an increase in employment that may bolster consumer spending, which accounts for about 70 percent of the world’s largest economy. At the same time, a possible recession in Europe and a political stalemate in Washington regarding a payroll tax cut are making some companies hesitant to boost hiring. “Most of the recent improvement in initial claims is genuine and points toward stronger job growth this month,� Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “The economy is ending 2011 on a positive note.� Third Decline A Labor Department spokesman said there was nothing unusual in the state-level data last week. It was the third straight week of declines in jobless claims. Applications were projected to increase from 366,000 initially reported for the prior week. Estimates ranged from 355,000 to 400,000. The four-week moving average, a less volatile measure than the weekly figures, dropped to 380,250 last week, the lowest since June 2008, from 388,250 the prior period. The number of people continuing to receive jobless benefits fell by 79,000 in the week ended Dec. 10 to 3.55 million, the lowest since September 2008. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 136,300 to 3.51 million in the week ended Dec. 3. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 2.8 percent from 2.9 percent, today’s report showed. State Figures Thirty-nine states and territories reported an increase in claims, while 14 reported a decrease. These data are reported with a one-week lag. Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly nonfarm payrolls report -- accelerates. Some companies are still trimming staff. Morgan Stanley, the sixth-biggest U.S. bank, said last week that it plans to cut about 1,600 jobs amid an industry-wide drop in revenue from investment banking and trading. Political gridlock in Washington may weigh on consumers next year. Paychecks for 160 million workers will be reduced in January unless lawmakers break a stalemate to extend a payroll tax cut. The impasse between lawmakers could dent household spending and economic growth in 2012. U.S. employers added 120,000 workers in November and the unemployment rate unexpectedly fell to 8.6 percent, the lowest since March 2009, the Labor Department reported Dec. 2. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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