But continuing claims hit record high of 6.66 million First-time filings for state unemployment benefits fell back in the latest week by 12,000, the Labor Department reported Thursday, but the number of continuing claims hit a record high. Initial jobless claims dropped by 12,000 to 631,000 in the week ending May 16, Labor Department data show, a slight improvement from the prior week's numbers. This week's reading was the lowest since the beginning of the month. Laid-off Chrysler workers inflated the claims data last week. Debt ratings worry investors Bob O'Brien reports that U.S. equities are poised for a lower open amid worries about stateside government-debt ratings after S&P's cut to the U.K.'s credit outlook. The four-week average, which measures the trend, also fell, by 3,500 claims to a seasonally adjusted 628,500. But workers are still having trouble finding jobs, continuing-claims data indicate. The number of continuing claims for the week ending May 9 was 6.66 million, an increase of 75,000 from the previous week and the highest reading on record, the Labor Department said. Similarly, the four-week average of continuing claims hit a record high, climbing by 131,000 to 6.48 million. A year ago, continuing claims were about half what they were in the latest week, at 3.06 million. The claims figures come a day after the Federal Open Market Committee projected that the unemployment rate would peak at or just below 10% this year. See related story on the Fed. The Labor Department also said the insured unemployment rate -- representing the portion of covered workers who are receiving benefits -- rose to 5% for the week ending May 9, up one-tenth of a percentage point from the prior week.

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