Jobless rolls at 26-year high

By Lucia Mutikani

WASHINGTON (Reuters) - Unemployment benefit rolls swelled to a 26-year high in the last week of December, data showed on Thursday, while retailers, including market leader Wal-Mart, reported poor sales as the year-long economic slump deepened.

The Labor Department said the number of people still on jobless rolls after drawing an initial week of aid jumped 101,000 to 4.61 million in the week ended December 27, the latest for which data is available.

That was the highest since November 1982 and beat analysts' expectations of 4.50 million, underscoring the difficulty people face getting another job when they are laid off.

"You are still seeing a lot of people of collecting unemployment claims, so the underlying conditions are very poor. The bad news in the continuing claims is relentless," said Pierre Ellis, senior global economist at Decision Economics in New York.

While the overall size of the benefit rolls has been marching steadily higher, the number of U.S. workers submitting new claims for state unemployment aid dropped unexpectedly last week, a second consecutive decline.

Initial claims fell 24,000 to 467,000 in the week ended January 3, the department said, well below the 540,000 new claims economists had expected. It was the lowest reading since the week ended October 11, when it was at 463,000.

Normally this would be seen as a suggestion that the labor market's deterioration was abating, but analysts said the decrease was likely due to people holding back applications because of the holidays.

"It covers a holiday period, so people were delaying filing their claims. There is going to be a surge next week," said David Watt, a senior currency strategist at RBC Capital Markets, in Toronto. "I don't think this is indicative of the trend."