Jobless Claims Climbed to a Nine-Month High Last Week

Applications for unemployment benefits in the U.S. unexpectedly increased last week to the highest level since November, showing companies are stepping up the pace of firings as the economy slows. Employers appear to be laying off workers again as the economic recovery weakens. The number of people applying for unemployment benefits reached the half-million mark last week for the first time since November.
Meanwhile, the index of leading U.S. economic indicators rose less than expected in July as the jobless-claims data raised economic concerns, and manufacturing activity contracted in the Mid-Atlantic region.

On Thursday morning the Labor Department reported that initial jobless claims rose by 500,000 last week, exceeding the Street’s forecast of 480,000, and is the highest level since November. The four-week moving average also rose to 482,500. Continuing claims, on the other hand, continued to decrease, falling by 13,000 in the week ending Aug. 7 to 4.5 million.
“The rise in initial jobless claims over the past three weeks makes it difficult to maintain confidence in the recovery and suggests the labor market is backtracking more than we first expected,” Ryan Sweet, an economist at Moody’s Analytics, wrote in a note to clients. The number of people still receiving benefits after an initial week of aid fell 13,000 to 4.48 million in the week ended August 7 from an upwardly revised 4.49 million the prior week. * Analysts polled by Reuters had forecast so-called continuing claims rising to 4.50 million from a previously reported 4.45 million.

A cooling economy may be discouraging employers from adding staff and prompting some to step up dismissals, raising the risk consumer spending will weaken more. The Federal Reserve said last week that the recovery would probably be “more modest” than anticipated, reflecting in part a jobless rate that’s restraining incomes.
“We’re seeing a renewed pickup in layoffs,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “If firms aren’t hiring it’s probably because they’re not producing. Demand will slow in the third quarter.”

Continuing claims reflect people who file each week after their initial claim until the end of their standard benefits, which usually last 26 weeks. The figures do not include those who have moved to state or federal extensions, nor people who have exhausted their benefits but are still out of a job.
The 4-week moving average for ongoing claims fell by 1,500 to 4.53 million.

Posted by Nicky Peterson on Aug 19 2010. Filed under Business, Featured News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry