Jobless Claims in U.S. Unexpectedly Jump
By -May 5, 2011
www.bloomberg.com
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The number of claims for U.S. unemployment benefits unexpectedly rose last week, pushed up by auto-plant shutdowns and other unusual events that seasonal variations failed to take into account, the Labor Department said.
Applications for jobless benefits jumped by 43,000 to 474,000 in the week ended April 30, the most since August, Labor Department figures showed today. A spring break holiday in New York, a new emergency benefits program in Oregon and auto shutdowns caused by the disaster in Japan were the main reasons for the surge, a Labor Department spokesman said as the data was released to the press.
Even before last week, claims had drifted up, raising concern the improvement in the labor market has stalled. Employers added 185,000 workers to payrolls in April, fewer than in the prior month, and the unemployment rate held at 8.8 percent, economists project a Labor Department report to show tomorrow.
“We’re seeing so many distortions in the claims numbers week to week that it’s hard to say, but I’m willing to be patient and wait and see,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “Other reports show an improvement in the labor market. It’s going to take a while to dig out of the hole we have in relation to the jobs the economy lost during the recession.”
Futures Fall
Stock-index futures dropped after the report. The contract on the Standard & Poor’s 500 Index maturing in June fell 0.6 percent to 1,334.8 at 8:58 a.m. in New York. Treasury securities rose, sending the yield on the benchmark 10-year note down to 3.18 percent from 3.22 percent late yesterday.Economists forecast 410,000 claims, according to the median estimate in a Bloomberg News survey. Forecasts ranged from 395,000 to 450,000 in the survey of 46 economists. The Labor Department revised the prior week’s figure up to 431,000 from an initially reported 429,000.
A spring break holiday at schools in the state of New York prompted workers to file claims, which the seasonal adjustment factors didn’t expect last week, the Labor Department official said. In addition, Oregon began a new emergency benefits program for the long-term unemployed that also pulled in some new claimants, he said. Finally, auto plant shutdowns due to parts shortages caused by the earthquake and tsunami in Japan also contributed to the increase, the official said.
The spokesman also said that any claims filed by workers throughout the South that lost their jobs due to the storms that spawned tornados would probably be reflected in a different set of data rather than in the initial claims figures.
Productivity Cools
The productivity of U.S. workers slowed in the first quarter and labor costs rose as a growing economy prompted companies to boost employment, another report from the Labor Department showed today.The measure of employee output per hour increased at a 1.6 percent annual rate, after a 2.9 percent gain in the prior three months. Expenses per employee climbed at a 1 percent rate after dropping 1 percent.
The four-week moving average for jobless claims, a less- volatile measure, rose to 431,250 from 409,000.
The number of people continuing to collect jobless benefits rose by 74,000 in the week ended April 23 to 3.73 million. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.
Extended Benefits
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 42,900 to 4.12 million in the week ended April 16.The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 3 percent in the week ended April 23 from 2.9 percent, today’s report showed. Twenty states and territories reported an increase in claims, while 33 had a decrease.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates. These data are reported with a one-week lag.
Employers announced fewer job cuts in April than the same month last year, Chicago-based Challenger, Gray & Christmas Inc. said yesterday. Planned firings decreased 4.8 percent to 36,490 last month from April 2010.
‘Signs of Improvement’
“Employment has begun to show signs of improvement,” Scott Davis, chief executive officer of United Parcel Service Inc., said during an April 26 call with analysts. “In the U.S., unemployment dipped below 9 percent for the first time in almost two years, further evidence that the recovery continues.”While payrolls have grown each month since October, Federal Reserve Chairman Ben S. Bernanke said on April 27 that central bankers would like to see more strength in the U.S. labor market, noting that a recovery has been “quite slow.”
“The labor market is improving gradually,” Bernanke said to reporters during the first-ever press conference following a Federal Open Market Committee meeting. “We would like to make sure that that is sustainable. The longer it goes on, the more confident we are.”
Another report yesterday showed employment at U.S. companies increased 179,000 in April, the smallest gain in five months, according to ADP Employer Services.
Stimulus Necessary
Federal Reserve Bank of Boston President Eric Rosengren yesterday said record stimulus is necessary to spur the “anemic” economy and that raising interest rates to combat increasing food and fuel prices would impede growth.“With significant slack in labor markets, stable inflation expectations, and core inflation well below our longer run target, there is currently no reason to slow the economy down with tighter monetary policy,” Rosengren said during a speech in Boston.
Cisco Systems Inc. (CSCO), the largest maker of computer- networking equipment, is among companies trying to cut costs. The San Jose, California-based company last week said it is offering early-retirement packages to some employees in the U.S. and Canada. The company didn’t specify how many workers it expected to take the packages or how much would be saved.
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