Saturday, February 27, 2010

Jobless Claims in U.S. Unexpectedly Increased 22,000 Last Week to 496,000

Jobless Claims in U.S. Unexpectedly Rose Last Week

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The number of Americans filing first-time claims for unemployment insurance unexpectedly increased last week, a sign that the economic recovery will be uneven as the labor market struggles to rebound.

Initial jobless applications rose by 22,000 to 496,000 in the week ended Feb. 20, the highest level in three months, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance gained and the four- week moving average of weekly claims jumped close to a three- month high.

Companies are waiting to see sustained sales before adding to payrolls, even as manufacturers help the country emerge from the worst recession since the 1930s. An unemployment rate that’s forecast to average 9.8 percent this year may restrain the housing market and gains in consumer spending, which accounts for about 70 percent of the U.S. economy.

“There are signs of recovery, but there are still companies that need to cut costs,” said Jonathan Basile, an economist at Credit Suisse in New York, who forecast claims would rise to 500,000. “Once the money comes in on a sustained basis they can plan better, and part of that planning includes hiring.”

Economists forecast weekly claims would fall to 460,000, from a previously estimated 473,000 for the week ended Feb. 13, according to the median of 43 projections in a Bloomberg News survey. Estimates ranged from 425,000 to 500,000.

Snowstorms

Harsh winter weather in parts of the U.S. in recent weeks has made weekly claims volatile. Initial claims have averaged almost 100,000 fewer per week this year than the average of 573,200 for all of last year.

A Labor Department spokesman today said part of the reason for the increase in weekly claims was the processing of a backlog of applications in mid-Atlantic states and New England, where snowstorms hit earlier this month.

The four-week moving average of claims, a less volatile measure than the weekly figure, increased to 473,750 last week, the highest level since late-November, from 467,750 the prior week, the report showed.

Continuing claims rose 6,000 to 4.62 million in the week ended Feb. 13. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.

Extended Benefits

Today’s report showed the number of people who’ve used up their traditional benefits and are now collecting extended payments decreased by about 318,000 to 5.5 million in the week ended Feb. 6.

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.5 percent in the week ended Feb. 13, today’s report showed. Nine states and territories had an increase in claims for that same week, while 44 had a decrease.

In testimony before lawmakers in Washington yesterday, Federal Reserve Chairman Ben S. Bernanke cited “tentative” signs of stabilization in labor markets, such as lower job losses, a rise in manufacturing employment and stronger demand for temporary help.

The unemployment rate in the U.S. dropped to 9.7 percent in January, while payrolls declined by 20,000, Labor Department figures showed Feb. 5. Manufacturers last month added to payrolls for the first time in three years, and that may provide a boost to the rest of the labor market in coming months.

Staff Reductions

Some companies continue to cut staff. PepsiCo Inc., the world’s largest snack maker, said it will close a Gatorade plant in Pryor, Oklahoma, that employs 109 workers. “Based on economic conditions we determined we could not keep the plant open,” Pat Burke, a regional spokesman for the Purchase, New York-based company, said in an e-mailed statement Feb. 18.

Other businesses are recalling laid-off workers. Caterpillar Inc., the world’s largest maker of bulldozers and excavators, is bringing back 100 technicians at an Indiana plant to meet increased demand.

“Caterpillar may be recalling or hiring employees in business units at various facilities this year based on demand fluctuation,” Bridget Young, a spokeswoman for the Peoria, Illinois-based company, said in a Feb. 18 e-mail. Caterpillar previously laid off about 500 workers at the plant in Lafayette.

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