Sat, Jan 23, 2010 page10

• US initial jobless claims register unexpected rise

  NO NET GAIN Hopes for a positive employment figure this month dimmed as more Americans claimed unemployment benefits for the first time, analysts said

  • AP
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  A surprising jump in first-time claims for unemployment benefits is a painful reminder that jobs remain scarce six months into the US economic recovery.

  The increase deflated hopes among some analysts that the economy would produce a net gain in jobs this month.

  The US Department of Labor said on Thursday that initial claims for unemployment insurance rose last week by 36,000 to a seasonally adjusted 482,000. Wall Street economists expected a small drop, Thomson Reuters said.

  The four-week average, which smooths fluctuations, rose for the first time since August to 448,250.

  BACKLOG

  A labor department analyst said that much of the increase last week was because of administrative backlogs left over from the winter holidays in the state agencies that process the claims.

  Still, that would indicate that claims totals in previous weeks were artificially low, many economists said.

  Those drops had raised hopes that layoffs were ending and that employers would add a modest number of jobs this month.

  This month’s employment report will be issued on Feb. 5, but the surveys that are used to compile that report were conducted last week, so economists pay are paying close attention to the jobless claims figures from that week.

  “The trend in the data is still discouraging,” Diane Swonk, chief economist for Mesirow Financial, wrote in a note to clients.

  “Hopes for a positive employment number in January ... are rapidly dimming,” she said.

  A separate report that seeks to forecast future economic activity was positive: The Conference Board’s index of leading economic indicators jumped 1.1 percent last month, suggesting that economic growth could pick up this spring.

  Eight of the 10 components in the index showed improvement, with the strongest gains in the interest rate spread and building permits, which are a signal of future home construction.

  The interest rate spread is the difference between the cost of borrowing money for 10 years and borrowing overnight.

  In jobs market, initial claims for unemployment benefits had dropped steadily since last fall, as companies cut fewer jobs.

  First-time claims have dropped by 50,000, or almost 10 percent, since late October.

  Still, employers are reluctant to hire. The labor department said earlier this month that employers cut 85,000 jobs last month, after adding 4,000 in November. November’s increase was the first in nearly two years. The unemployment rate was 10 percent, unchanged from November.

  Many economists say the four-week average of claims will need to fall to below 425,000 to signal that the economy is close to generating net job gains.

  SLOW GDP GROWTH

  The economy is growing, but not quickly enough to bring down widespread joblessness. Most economists estimate that GDP, the broadest measure of the economy’s output, grew at about a 4 percent clip in last year’s fourth quarter. That followed 2.2 percent growth in the July-September period.

  Meanwhile, the number of Americans continuing to claim regular benefits dropped slightly to just under 4.6 million. The continuing claims data lags initial claims by a week.

  However, the so-called continuing claims do not include millions of people who have used up the regular 26 weeks of benefits customarily provided by states and are now receiving extended benefits for up to 73 additional weeks, paid for by the federal government.

  More than 5.9 million are receiving extended benefits in the week ending on Jan. 2, the latest data available, an increase of more than 600,000 from the previous week.

  The data for emergency benefits lags initial claims by two weeks.
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