WASHINGTON – The number of newly laid-off workers seeking jobless benefits rose last week, though the government said its report again was distorted by the timing of auto plant shutdowns.
Unemployment insurance claims have declined steadily since the spring, but most private economists and the Federal Reserve expect jobs to remain scarce and the unemployment rate to top 10 percent by year-end.
The Labor Department said Thursday that its tally of initial claims for unemployment insurance rose by 30,000 to a seasonally adjusted 554,000. That was above analysts' estimates of 550,000.
The increase follows two straight weeks of sharp drops largely because automakers didn't lay off as many workers as expected in early July. General Motors and Chrysler temporarily shut down many of their plants earlier than usual this year, in May and June, after filing for bankruptcy protection and restructuring their companies.
A department analyst said the government's seasonal adjustment process expected claims to drop sharply last week, after the normal pattern of auto layoffs was complete. But that didn't happen, causing seasonally-adjusted claims to rise.
Weekly claims remain far above the 300,000 to 350,000 that analysts say is consistent with a healthy economy. New claims last fell below 300,000 in early 2007. The lowest level this year was 488,000 for the week ended Jan. 3.
The total jobless benefit rolls, meanwhile, fell by a more-than-expected 88,000 to 6.2 million, the lowest level since mid-April. And the four-week moving average of claims, which normally smooths out some volatility, fell by 19,000 to 566,000.
But the number of people on emergency extended state and federal programs continued to rise. Unemployment insurance recipients can receive up to 53 weeks of additional benefits from the emergency programs, on top of the 26 weeks typically provided by the states.
When the extended benefit rolls are included, more than 9.1 million people received jobless benefits for the week of July 4, the latest data available.
The recession, which started in December 2007 and is the longest since World War II, has eliminated a net total of 6.5 million jobs. The unemployment rate in June rose to 9.5 percent, a 26-year high.
More job cuts were announced this week, many by major airlines.
Houston-based Continental Airlines Inc. reported a quarterly loss of $213 million and said it would slash 1,700 more jobs on top of 1,200 already announced. Southwest Airlines Co., which has never laid off workers, announced that 1,400 employees — about 4 percent of its work force — took offers of cash and travel benefits to leave the Dallas-based company.
Among the states, New York reported the largest increase in initial claims, with 12,504, which it attributed to higher layoffs in the construction and transportation industries. The next largest increases were reported by North Carolina, Florida, Missouri and Tennessee. The state data lags initial claims by one week.
Michigan reported the largest decrease, with 6,648, which it attributed to fewer layoffs in most industries. Massachusetts, New Jersey, Indiana and California reported the next largest drops.
Job losses slow to 247,000; jobless rate dips
By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa, Ap Economics Writer – 18 mins ago
WASHINGTON – Employers throttled back on layoffs in July, cutting just 247,000 jobs, the fewest in a year, and the unemployment rate dipped to 9.4 percent, its first decline in 15 months.
It was a better-than-expected showing that offered a strong signal that the recession is finally ending.
The new snapshot, released by the Labor Department on Friday, also offered other encouraging news: workers' hours nudged up after sinking to a record low in June, and paychecks grew after having fallen or flat lined in some cases.
To be sure, the report still indicates that the jobs market is on shaky ground. But the new figures were better than many analysts were expecting and offered welcomed improvements to a part of the economy that has been clobbered by the recession.
Analysts were forecasting job losses to slow to around 320,000 and the unemployment rate to tick up to 9.6 percent.
The dip in the unemployment rate — from June's 9.5 percent — was the first since April 2008. One of the reasons the rate went down, however, was because hundreds of thousands of people left the labor force. Fewer people, though, did report being unemployed.
All told, there were 14.5 million out of work in July.
If laid-off workers who have given up looking for new jobs or have settled for part-time work are included the unemployment rate would have been 16.3 percent in July. That's down from 16.5 percent in June, which was the the highest on records dating to 1994.
Since the recession began in December 2007, the economy has lost a net total of 6.7 million jobs.
Also heartening: job losses in May and June turned out to be less than previously reported. Employers sliced 303,000 positions in May, versus 322,000 previously logged. And, they cut 443,000 in June, compared with an earlier estimate of 467,000.
The job cuts made in July were the fewest since August 2008.
The slowdown in layoffs in part reflected fewer jobs cuts in manufacturing, construction, professional and business services and financial activities — areas that have been hard hit by the collapse of the housing market and the financial crisis. Retailers, however, cut more jobs in July.
Those losses were blunted by job gains in government, education and health services, and in leisure and hospitality.
Still, the worst of the job cuts have passed.
The deepest job cuts of the recession came in January, when 741,000 job disappeared, the most in any month since 1949.
Slower job losses are occuring because companies aren't cutting investment and spending as drastically as they had been during the depths of the recession which came in the final quarter of last year and carried over into the first quarter of this year.
With companies feeling a bit better about the economy's prospects and their own, they boosted workers' hours in July. The average work week rose to 33.1 hours, after having fallen to 33 hours in June, the lowest on records dating to 1964.
And, employers bumped up wages. Average hourly earnings rose to $18.56 in July, up from $18.53 in June. Hourly earnings were stagnant in June. Average weekly earnings, which fell in June, rose to $614.34.
Other recent barometers have shown some improvements in manufacturing, housing and construction activity.
The government reported last week that the economy shrank at a pace of just 1 percent from April-to-June, the strongest signal yet that the recession may be ending.
Many analysts predict the economy could start growing again in the current July-to-September quarter. And, the Fed recently observed that the economy is finally showing signs of stabilizing in some regions of the country — especially in parts of the Northeast and Midwest — bolstering hopes of a broader-based recovery this year.
Even with the improvements, it will take time for the jobs market to fully heal.
The Federal Reserve has predicted the unemployment rate is likely to top 10 percent this year. Some Fed officials think it could rise as high as 10.6 percent in 2010. The post-World War II high was 10.8 percent at the end of 1982, when the country suffered through a severe recession.
An elevated unemployment rate could become a political liability for President Barack Obama when congressional elections are held next year. The last time the unemployment rate topped 10 percent, the party of the president — then Ronald Reagan's GOP — lost 26 House seats in the midterm elections in 1982.
Obama has urged Americans to be patient and give time for his $787 billion stimulus package of tax cuts and increased government spending to take hold. Most of the money will flow in 2010.
When the economy is healthy, employers add a net total of around 125,000 jobs a month just to keep the unemployment rate stable. To get the jobless rate down to a more normal 5 percent range, it would take stronger job growth — of at least 200,000 jobs a month. Economists say it might take until 2013 to drive down the unemployment rate to 5 percent.