Your Economy (No Politics)

[Bullwinkle]

U.S. Initial Jobless Claims Rose Last Week to 372,000
(Update1)
By Courtney Schlisserman


May 29 (Bloomberg) -- The number of Americans filing first- time claims for unemployment benefits increased last week, a sign the labor market is deteriorating as the economy slows.

Initial jobless claims rose 4,000 to 372,000 in the week ended May 24, from a revised 368,000 the prior week, the Labor Department said today in Washington. The total number of people collecting benefits swelled to 3.104 million in the week ended May 17, the highest level since February 2004.

U.S. companies are responding to the current economic downturn by reining in hiring rather than making workforce cuts as steep as they have in past recessions. In the 2001 recession, initial claims averaged 415,600 a week.

``The labor market has loosened, but on an historic basis it's still relatively tight,'' said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado. ``Essentially the projections of weakness people have may have overdone the path we're going to see in 2008.''

A separate government report showed the U.S. economy grew more than previously estimated in the first quarter as the trade deficit shrank to a five-year low. The 0.9 percent gain in gross domestic product from January through March compares with the government's advance estimate of 0.6 percent issued in April, according to revised figures from the Commerce Department today in Washington.

Treasury Yields

Treasuries, which had dropped earlier in the day, pared their losses. Ten-year notes yielded 4.03 percent at 8:42 a.m. in New York, from 4 percent late yesterday.

Economists had forecast claims would rise to 370,000, from a previously reported 365,000 a week earlier, according to the median of 38 projections in a Bloomberg News survey. Estimates ranged from 355,000 to 380,000.

The four-week moving average of initial claims, a less volatile measure, fell to 370,500 from 373,000.

The unemployment rate among people eligible for benefits, which tends to track the U.S. jobless rate, held at 2.3 percent. Twenty-eight states and territories reported an increase in new claims, while 25 had a decrease. These data are reported with a one-week lag.

May Jobs Report

Weekly claims have averaged 358,150 so far this year, compared with an average of 321,000 in 2007, when the economy generated an average of 91,000 new jobs a month.

The figures for continuing claims coincide with the week that the government surveys employers for the monthly payrolls report. The Labor Department is scheduled to release the report for May on June 6. The U.S. has lost jobs every month this year so far, including a 20,000 drop in April.

The weaker labor market, along with higher food and energy costs and lower home prices, are cutting into Americans' outlooks and resulting in slower consumer spending. Earlier this week, the Conference Board said its measure of consumer confidence fell in May to the lowest level since October 1992.

The share of respondents to the Conference Board survey saying that jobs are plentiful fell to 16.3 percent, from 17.1 percent in April. Those saying jobs were hard to get increased to 28 percent, from 27.9 percent.

Fed's Outlook

Federal Reserve policy makers last month projected the unemployment rate will rise more than they previously anticipated, heightening concern over consumer spending, according to minutes of the April meeting issued last week.

The nation's jobless rate in April was 5 percent, lower than the average of 5.3 percent a month since the economy emerged from the last recession in December 2001.

Central bankers forecast the jobless rate would average 5.5 percent to 5.7 percent in the last three months of the year, up from a January estimate of 5.2 percent to 5.3 percent. Figures from the Labor Department showed the unemployment rate dropped to 5 percent in April.

Spending last quarter rose at a 1 percent annual pace, the smallest gain since the 2001 recession. The economy expanded at a 0.6 percent annual rate from January through March and the growth rate for the six months through March was also the lowest since the contraction seven years ago.

Automakers are among the industries suffering in the current economy.

Ford Motor Co. Chief Executive Officer Alan Mulally said May 22 the company plans to eliminate more production and salaried jobs.

The company, the second-largest U.S. automaker, delayed its goal of returning to a profit to next year and said North American vehicle production will be cut for the rest of 2008. Ford has cut 46,300 jobs in North American in the past two years and 4,200 more U.S. factory workers have agreed to leave this year through buyouts.

To contact the reporter on this story: Courtney Schlisserman in Washington [e-mail]

Last Updated: May 29, 2008 08:46 EDT

http://www.bloomberg.com/apps/news?pid=20601087&sid=aOMLzLfvLQZ8&refer=home