U.S. Initial Jobless Claims Rise by 30,000 to 554,000

By Courtney Schlisserman

July 23 (Bloomberg) -- The number of Americans filing claims for unemployment benefits jumped last week from a six- month low as distortions caused by shifts in the timing of auto- plant shutdowns subsided.

Applications rose by 30,000 to 554,000 in the week ended July 18, in line with forecasts, figures from the Labor Department showed today in Washington. Claims had fallen by 93,000 over the previous two weeks. The number of people collecting unemployment insurance decreased to the lowest level in three months, also reflecting seasonal issues surrounding closures at carmakers.

“The numbers have come down but they still have a ways to go down before the bleeding of jobs is over,” said Andrew Gretzinger, a senior economist at MFC Global Investment Management in Toronto, who had forecast 555,000 claims. “The labor market is still weak and is going to remain that for some time to come.”

Federal Reserve Chairman Ben S. Bernanke this week said unemployment was the “most pressing issue” facing policy makers aiming to stem the worst recession in five decades. The loss of jobs threatens to undermine consumer spending and represents a “downside risk” to the economy, he said. An analyst at Labor said claims will probably remain volatile for another week.

Economists forecast claims would increase to 557,000 from a previously reported 522,000 for the prior week, according to the median of 44 projections in a Bloomberg News survey. Estimates ranged from 500,000 to 600,000.

Stock Futures
Stock-index futures advanced as San Jose, California-based EBay Inc. and Dearborn, Michigan-based Ford Motor Co. reported better-than-estimated results and investors speculated a report today may show home resales increased. Futures on the Standard & Poor’s 500 Index rose 0.3 percent to 952.00 at 9 a.m. in New York.

The four-week moving average of jobless claims, a less- volatile measure than weekly initial claims, declined to 566,000, the lowest level since January, from 585,000.

The level of continuing claims decreased by 88,000 to 6.23 million in the week ended July 11, the lowest since April, from 6.31 million.

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 4.7 percent in the week ended July 11.

Forty-one states and territories reported an increase in new claims, while 12 reported a decrease. These data are reported with a one-week lag.

Payrolls Report
Today’s figures coincide with the week the Labor Department conducts its survey for the monthly payrolls report. U.S. employers have eliminated 6.5 million positions since the recession began in December 2007, the most of any downturn since the Great Depression.

Economists surveyed by Bloomberg earlier this month project the jobless rate will exceed 10 percent by early 2010, even as the worst of the job cuts may have passed.

Bernanke this week said that while the economy is showing “tentative signs of stabilization” the central bank intends to maintain a “highly accommodative” monetary policy for “an extended period.”

“Job insecurity, together with declines in home values and tight credit, is likely to limit gains in consumer spending,” Bernanke said in testimony before Congress. “The possibility that the recent stabilization in household spending will prove transient is an important downside risk to the outlook.”

Job Cuts
Air Products & Chemicals Inc., the world’s largest hydrogen producer, yesterday said it will cut more jobs and close more plants to reduce expenses. Chief Executive Officer John McGlade is eliminating an additional 1,150 jobs, or 6 percent of the workforce, as the global recession trims demand.

“While we are still seeing the impact of the global recession on our volumes, we’ve seen signs of improvement during this quarter in some of our end markets, particularly in electronics and Asia,” McGlade said in a statement.

Jobless claims tend to be volatile in late June and July, when automakers typically halt production and idle workers to re-equip factories to build new models. General Motors Co. and Chrysler LLC halted production earlier than usual this year as they worked through bankruptcy proceedings.

GM emerged from bankruptcy this month and Chrysler did the same in June.