Total continuing claims which include seasonally adjusted continuing claims (4.981 million for the week ended 12/19) and not seasonally adjusted claims under emergency programs (5.44 million) climbed to 10.42 million for the week December 19 (continuing claims under emergency programs lag initial jobless claims by two weeks).  The initial jobless claims numbers (see chart 1) indicate that the pace of layoffs has slowed but total continuing claims (see chart 2) suggest that firms remain reluctant to hire and the budgetary costs of unemployment insurance continue to advance. 

As charts 1 and 3 indicate, a large reduction of initial and continuing claims is necessary for labor market conditions to have recovered.  The employment report for December, to be published on January 8, will offer additional insights about the labor market.  The unemployment rate is predicted to have risen to 10.1% in December from 10.0% in November.  Nonfarm payrolls are expected to have dropped 25,000 in December following a loss of 11,000 jobs in November.  The length of the workweek (33.2 hours in November) and the number of part-time employees (9.426 million) are other indicators that will be watched closely.