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New jobless claims rise unexpectedly to 627K

Jun 25

Posted by sophie in Uncategorized

The number of people filing new jobless claims jumped unexpectedly last week, and the total unemployment benefit rolls rose to more than 6.7 million.

The Labor Department data released Thursday show jobs remain scarce even as the economy shows some signs of recovering from the longest recession since World War II.

The department said initial claims for jobless benefits rose last week by 15,000 to a seasonally adjusted 627,000. Economists expected a drop to 600,000, according to Thomson Reuters.

Several states reported more claims than expected from teachers, cafeteria workers and other school employees, a department analyst said.

The number of people continuing to receive unemployment insurance rose by 29,000 to 6.74 million, slightly above analysts’ estimates of 6.7 million.

The four-week average of claims, which smooths out fluctuations, was largely unchanged, at 616,750.

Economists expect the number of initial unemployment insurance claims, which reflects the level of layoffs, to slowly decline over the coming months as the economy bottoms out.

Still, claims remain far above levels associated with a healthy economy. A year ago they were 392,000.

Economists say any recovery is likely to be weak, and the unemployment rate, currently at 9.4 percent, is expected to top 10 percent by the end of this year.

Millions of Americans also are receiving jobless benefits through a federal extension enacted by Congress last year. For the week ending June 6, more than 2.4 million people received benefits under the extension, which adds 20 to 33 weeks on top of the 26 weeks typically provided by states.

About 288,000 people also are receiving benefits under state emergency programs, bringing the total jobless benefit rolls to nearly 8.8 million that week. The extended benefits data lags initial claims by two weeks.

Other recent reports indicate the economy could be bottoming. The Commerce Department said Wednesday that orders to factories for durable goods such as computers, machinery and aircraft increased 1.8 percent in May, much better than analysts expected.

But sales of new homes fell 0.6 percent last month, the government said, as the housing sector remains weak. Analysts had expected an increase in sales.

The Federal Reserve said Wednesday that the recession is easing, though the economy will remain weak enough to keep inflation in check. Fed Chairman Ben Bernanke has said the economy will begin to recover by the end of this year.

Companies have cut a net total of 6 million jobs since the downturn began in an effort to reduce costs.

Still, job cuts are slowing. Employers eliminated 345,000 positions in May, about half the monthly average of jobs lost in the first quarter.

Troubles in the automotive sector also may cause unexpected fluctuations in the claims. General Motors Corp. filed for bankruptcy protection June 1, joining Chrysler LLC, which filed April 30.

Companies are still shedding jobs. Monsanto Co., the world’s biggest seed maker, said Wednesday that it will lay off about 900 workers, or about 4 percent of its work force, as its third-quarter profit fell 14 percent.

Among the states, Florida had the largest increase in claims of 8,383, which it attributed to greater layoffs in the construction, trade, service, manufacturing and agriculture industries. The next largest increases were in Pennsylvania, Missouri, Puerto Rico and California. The state data lag initial claims by a week.

Michigan had the largest drop in claims of 5,414, which it attributed to fewer layoffs in the auto industry. The next largest decreases were in New York, North Carolina, Tennessee and Ohio.

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Total US jobless rolls drop sharply to nearly 6.7M

Jun 18

Posted by sophie in Uncategorized

The total number of people on the unemployment insurance rolls dropped for the first time since early January, the government said Thursday, while new claims for benefits rose slightly.

The Labor Department said the total unemployment insurance rolls fell by 148,000 to 6.69 million in the week ending June 6, the largest drop in more than seven years. The decline is a sign that layoffs are easing.

The drop also breaks a string of 21 straight increases in continuing claims, the last 19 of which were records. A dip in continuing claims several weeks ago was later revised higher.

The department also said initial claims rose 3,000 to a seasonally adjusted 608,000 last week, above analysts’ expectations. The four-week average, which smooths fluctuations, fell by 7,000 to 615,750. Continuing claims data lags initial claims by one week.

The drop in continuing claims could signal a slowing in the rise of the unemployment rate, which reached a 25-year high of 9.4 percent in May. Many economists forecast the rate could reach 10 percent by the end of the year.

Still, millions of Americans are receiving unemployment compensation under an emergency federal program authorized by Congress last summer and extended by the Obama administration’s stimulus package.

About 2.36 million people received benefits under that program in the week ending May 30, an increase of more than 102,000 from the previous week. That’s in addition to the 6.7 million people receiving benefits under the 26-week program typically provided by states.

Economists also are closely watching the level of first-time claims for signs the economy will recover by mid-summer, as many analysts predict.

“If the labor market is indeed stabilizing, we should see a marked decline in new unemployment filings in the weeks ahead,” economists at Wrightson ICAP wrote in a note to clients this week.

The four-week average of claims has dropped by about 40,000 from nearly 659,000 in early April, its peak for the current recession.

But many economists want to see it fall further. Bruce Kasman, chief economist at JPMorgan Chase & Co., said Tuesday that a drop in the four-week average to 580,000 by next month would be sufficient to declare the recession over.

Kasman is chairman of the American Bankers Association’s economic advisory committee, a group of economists for large banks that this week predicted the economy will recover in the third quarter. The Federal Reserve also expects the economy to begin growing again this year.

First-time jobless claims are a measure of the pace of layoffs and are seen as a timely, if volatile, indicator of the economy’s health. Initial claims stood at 390,000 a year ago.

Consumers and businesses have cut back on spending in response to the bursting of the housing bubble and the financial crisis, sending the economy into the longest recession since World War II. Companies have cut a net total of 6 million jobs since the downturn began in December 2007, in an effort to reduce costs.

Still, job cuts are slowing. The Labor Department said employers eliminated 345,000 positions in May, about half the monthly average of jobs lost in the first quarter.

More job cuts have been announced in the past week. MySpace, the social networking Web site owned by News Corp., said Tuesday it will cut nearly 30 percent of its work force, or about 420 jobs.

And Cessna Aircraft Co., the nation’s largest builder of corporate jets, said Friday it will cut 1,300 jobs by August, on top of 6,900 layoffs that it previously announced.

Among the states, Pennsylvania reported the largest increase in initial claims for the week ending June 6. It attributed the increase of 6,861 claims to layoffs in the construction, service and transportation industries. The next largest increases were in Florida, Ohio, California and New York.

Arkansas had the largest decrease of 1,206, which it attributed to fewer layoffs in the auto industry. The next largest drops were in Puerto Rico, Wisconsin, Arizona and Nebraska.

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Consumer prices rise less than expected in May

Jun 17

Posted by sophie in Uncategorized

Consumer prices rose less than expected in May, fresh evidence that the recession is keeping inflation in check.

The Labor Department reported Wednesday that the consumer price index rose a seasonally adjusted 0.1 percent last month, below analysts’ expectations of a 0.3 percent rise.

Excluding volatile food and energy costs, core prices also increased 0.1 percent, matching expectations.

Low inflation enables the Federal Reserve to keep a key short-term interest rate near zero, where it has been for months.

The recession is holding down prices as the unemployment rate has reached a 25-year high and factories are operating at record-low levels. Workers concerned about their jobs are less likely to push for higher pay, while low consumer demand has made it difficult for companies to raise prices.

Gasoline prices rose 9.6 percent in May, before seasonal adjustment, the department said. But they are still much lower than last year, when prices at the pump topped $4 a gallon during the summer.

Due to that decline, consumer prices fell 1.3 percent in the 12 months ending in May, the steepest drop in 59 years. The core CPI has increased 1.8 percent since last year.

Food prices in the U.S. fell for the fourth straight month in May, the department said, as costs fell for all six of the major grocery food groups, including fruits and vegetables, meats and poultry, and dairy products.

Tobacco prices fell 0.3 percent after two months of large increases. Cigarette makers increased prices in the spring ahead of a steep tax increase.

Still, falling prices can raise fears about deflation, a destabilizing period of extended declines. Lower prices may seem like a good thing, but deflation can cause consumers to postpone purchases, leading to drops in production and wage cuts.

But most analysts say efforts by the Fed to stimulate the economy will prevent that from occurring.

Besides lowering its benchmark interest rate to record lows, the Fed has taken other measures to flood the banking system with cash to counter a severe credit crisis.

There are concerns about deflation in other parts of the world, especially in Japan, where prices have been falling. That country underwent a destabilizing bout of deflation during the 1990s, when the world’s second largest economy struggled to emerge from a real estate and banking crisis.

Price declines also have been registered in China and India.

A group of economists from the nation’s largest banks predicted Tuesday that prices will continue to fall this year. The American Bankers Association’s Economic Advisory Committee projects that core consumer prices will decline at a 1 percent annual rate by the end of 2009.

But Bruce Kasman, chief economist for JPMorgan Chase & Co. and chairman of the committee, said inflation is a greater risk than deflation over the next several years, due to huge budget deficits topping $1 trillion this year and next.

Many economists don’t expect the Fed to raise interest rates until the unemployment rate stops rising. It rose to a 25-year high of 9.4 percent in May and many forecasters believe the jobless rate will top 10 percent by year’s end.

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New jobless claims drop to 601K; retail sales rise

Jun 11

Posted by sophie in Uncategorized

The number of newly laid-off Americans filing jobless claims fell more than expected last week and retail sales grew in May for the first time in three months, fresh evidence that the worst of the recession may have past.

The Labor Department said Thursday that initial claims for unemployment benefits fell last week by 24,000 to a seasonally adjusted 601,000. That’s below analysts’ estimates of 615,000.

Still, the number of people claiming benefits for more than a week rose by 59,000 to more than 6.8 million, the highest on records dating to 1967. The department also revised last week’s data on continuing claims, replacing what had been a drop of 15,000 with an increase of 6,000.

That means continuing claims have set records for 19 straight weeks. The data lag initial claims by a week.

Retail sales rose for the first time in three months in May, as a rebound in demand at auto dealerships and gas stations helped offset weakness at department stores. The Commerce Department said retail sales increased by 0.5 percent last month, in line with economists’ expectations. It was the largest increase since sales rose 1.7 percent in January following six straight declines.

Consumers may be spending a bit more and layoffs may be slowing, but companies are reluctant to hire amid the longest recession since World War II. That makes it harder for the unemployed to find work.

Jobless claims are a measure of the pace of layoffs and are seen as a timely, if volatile, indicator of the economy’s health.

The four-week average of claims, which smooths out fluctuations, fell to 621,750, down from a high of about 658,000 in early April. Many economists see the decline as a sign that layoffs have peaked and the recession is bottoming out.

Still, the levels are far above what is customary in a healthy economy. Initial claims stood at 388,000 a year ago.

The department said last week that companies eliminated a net total of 345,000 jobs in May. While steep, that’s about half the monthly average of jobs lost in the first quarter.

Yet the unemployment rate jumped to 9.4 percent in May, a 25-year high, as hundreds of thousands of people entered the labor market and began looking for work but couldn’t find it, the department said.

As college graduates and other new entrants start searching for a dwindling number of jobs, economists expect the unemployment rate to rise even as layoffs subside.

Some economists project the rate could near 11 percent by the middle of next year. And many families are spending less and saving more as they deal with layoff fears and shrunken home equity and retirement accounts.

Troubles in the automotive sector could cause unexpected fluctuations in jobless claims. General Motors Corp. filed for bankruptcy protection June 1, joining Chrysler LLC, which filed April 30.

GM said it will close about a dozen plants as part of its restructuring. The closings, which will take place through the end of 2010, will cost up to 20,000 workers their jobs.

In addition, the company said Monday that it plans to cut a production shift at a plant in Wentzville, Mo., in August, resulting in up to 900 layoffs.

Among the states, Connecticut had the largest increase in claims of 816, followed by Louisiana, Tennessee, Arizona and Nebraska. The state data lag initial claims by a week.

Florida had the largest drop in claims of 6,655, which it attributed to fewer layoffs in the construction, service and manufacturing industries. The next largest decreases were in Illinois, Michigan, California, and Texas.

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