The New York Times
August 5, 2010
WASHINGTON (AP) -- Initial requests for jobless benefits rose last week to the highest level since April, a sign that hiring remained weak and that some companies were still cutting workers.
The Labor Department said Thursday that new claims for unemployment insurance rose by 19,000, to a seasonally adjusted 479,000. Analysts had expected a small drop. Claims have risen twice in the last three weeks.
Some of the increase stemmed from difficulties the government had in adjusting for seasonal factors. The Labor Department expected a large decline in claims last week, as many auto companies usually shut their plants temporarily in early July. Claims were expected to rise during the shutdown and then fall.
But this year General Motors and other manufacturers skipped the shutdowns, and claims did not fall last week as much as expected.
Before seasonal adjustment, claims last week fell by about 14,250, to 399,570.
The seasonally adjusted four-week average of claims, which smoothes out volatility, rose by 5,250, to 458,500.
Economists closely watch initial claims because they are considered a gauge of the pace of layoffs and an indication of employers' willingness to hire.
Applications for unemployment insurance have fluctuated between 450,000 and 480,000 all year, after declining steadily last year from a peak of 651,000 in March 2009. In a healthy economy with rapid hiring, claims usually fall below 400,000.
The tally of laid-off workers continuing to claim unemployment benefits fell by 34,000, to 4.54 million. That does not include an additional 3.9 million people receiving extended unemployment benefits paid by the federal government.
During the recession, Congress added up to 73 weeks of additional benefits on top of the 26 weeks typically provided by states. Those benefits were interrupted in June when Republicans blocked an extension. But Congress has since reinstated the program through November.
The economy began growing last year, and that growth accelerated in the winter and spring. It spurred some modest hiring, but not enough to rapidly reduce the unemployment rate, which is 9.5 percent.
Economists worry the recovery is slowing. Americans are spending cautiously as they save more and pay down debt. Home sales and construction slumped after a popular homebuyers' tax credit expired April 30. The impact of the federal government's stimulus efforts is fading.
More jobs are needed to give consumers more spending power to help support a sustainable recovery.
But it is not clear if the new jobs will come fast enough. On Friday, the Labor Department will issue the July jobs report, and economists expect it will show that the nation lost a net total of 65,000 jobs. That includes the end of about 150,000 temporary Census Bureau jobs.
Excluding government employment, private companies are expected to have added a net total of 90,000 jobs.