BL: Jobless Claims in U.S. Unexpectedly Rise on Backlog (Update1)
By Bob Willis
Jan. 21 (Bloomberg) -- More Americans than anticipated filed claims for unemployment benefits last week, reflecting a backlog of applications from the year-end holidays.
Initial jobless claims rose by 36,000 to 482,000 in the week ended Jan. 16, the highest level in two months, from 446,000 the prior week, Labor Department figures showed today in Washington. The jump was due to an “administrative” accumulation from late December and early January holidays, and did not reflect “economic” reasons, a Labor Department spokesman said.
The biggest increase in sales in two decades and an expanding economy may be prompting companies to retain remaining staff after cutting 7.2 million workers from payrolls since the recession began in December 2007. A rebound in hiring may take longer to develop, one reason why unemployment is forecast to average 10 percent this year.
“The labor market is moving in the right direction, and it isn’t unrealistic to expect employment to stabilize this quarter,” Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “The labor market has plenty of room for improvement and the economy is not adding the amount of jobs necessary to stabilize the unemployment rate.”
Stock-index futures dropped immediately after the report, erasing earlier gains. The contract on the Standard & Poor’s 500 Index was down 0.1 percent to 1,132.8 at 8:34 a.m. in New York. Treasury securities fell.
Exceeds Forecast
Initial jobless claims were forecast to decline to 440,000 from 444,000 the week before, according to the median estimate of 40 economists surveyed by Bloomberg. Estimates ranged from 430,000 to 457,000.
Continuing claims fell by 18,000 to 4.6 million in the week ended Jan. 9. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Today’s report showed the number of people who’ve used up their traditional benefits and are now collecting extended payments increased by about 613,000 to 5.92 million in the week ended Jan. 2.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.5 percent in the week ended Jan. 9, today’s report showed.
Payroll Losses
The U.S. unexpectedly lost 85,000 jobs in December after a revision for November showed the first payroll gain in almost two years, according to Labor Department data released Jan. 9.
The unemployment rate held at 10 percent, near the 26-year high of 10.1 percent reached in October. The report also showed workers were unemployed for 29.1 weeks on average, the most since records began in 1948.
The loss of jobs since the recession began has been the worst in the post-World War II era.
The world’s largest economy probably grew in excess of 5 percent at an annual rate in the fourth quarter, the best performance in almost six years, according to forecasts by economists at JPMorgan Chase and Credit Suisse in New York. Gross domestic product expanded at a 2.2 percent in the previous three months, the first gain in more than a year.
Sales at factories, wholesalers and retailers increased 6.2 percent from June through November, the biggest six-month gain since 1987, according to figures from the Commerce Department.
Closing Plant
Smithfield Foods Inc., the world’s largest pork processor, is among companies cutting jobs in a bid to lower costs. The Smithfield, Virginia-based companies said yesterday it plans to close an Iowa meat plant that was among the company’s oldest and most inefficient. The shutdown will affect 1,450 workers.
The John Morrell & Co. facility in Sioux City, Iowa, will close on April 20 and shift some pork production to other locations, the Smithfield, Virginia-based company said yesterday in a statement.
“We recognize that layoffs and plant closings are difficult for everyone concerned,” Joseph B. Sebring, the president of John Morrell, said in the statement. “At the same time, we believe this is a necessary business decision.”
Chevron Corp., the second-biggest U.S. oil company, said Jan. 19 it will cut an undisclosed number of refining jobs as part of a restructuring.
Details of the restructuring will be announced in March, spokesman Lloyd Avram said in an interview from San Ramon, California. “The organization is going to be leaner and less complex,” he said. “It will require fewer positions.”
To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net
Last Updated: January 21, 2010 08:37 EST
