More Americans Than Forecast File Claims for Jobless Benefits
More Americans than forecast filed applications for unemployment benefits last week, signaling firings stepped up as the economy slowed.
Initial jobless claims rose by 2,000 to 484,000 in the week ended Aug. 7, the highest level since mid February, Labor Department figures showed today in Washington. The number of people receiving unemployment benefits dropped, while those getting supplemental benefits surged by 1.34 million reflecting the government’s extension of eligibility.
Companies may be losing confidence in the recovery and are hesitant to hire, raising the risk of further erosion in consumer spending, the biggest part of the economy. Federal Reserve policy makers this week said growth “is likely to be more modest” than they previously projected, prompting central bankers to take additional steps to spur a rebound.
“There’s still considerable uncertainty about the economic outlook,” said David Resler, chief economist at Nomura Securities International Inc. in New York. “Businesses are simply reluctant to put people on payrolls and are more willing to let them go. This week’s increase was more disappointing than what we’ve seen in recent weeks.”
Stocks dropped as the report added to evidence the world’s largest economy was slowing. The Standard & Poor’s 500 Index fell 0.8 percent to 1,080.5 at 10:28 a.m. in New York. Treasury securities were little changed after erasing earlier losses.
Economists forecast claims would fall to 465,000, according to the median of 42 projections in a Bloomberg News survey. Estimates ranged from 450,000 to 480,000. The government revised the prior week’s claims figure up to 482,000 from a previously reported 479,000.
Prices of goods imported into the U.S. rose in July for the first time in three months, led by higher fuel costs, another Labor Department report showed today. The 0.2 percent increase in the import-price index was smaller than projected and followed a 1.3 percent June drop. Prices excluding energy fell 0.3 percent.
There were no special factors influencing last week’s data, a Labor Department spokesman told reporters as the figures were being released.
The four-week moving average of claims climbed to 473,500 from 459,250, today’s report showed.
The number of people continuing to collect unemployment benefits fell by 118,000 to 4.45 million in the week ended July 31, from 4.57 million the prior week.
The continuing claims figure does not include those receiving extended benefits under federal programs. The number of Americans who’ve used up traditional benefits and are now collecting emergency and extended payments soared by 1.34 million to 5.28 million in the week ended July 24. That was the week legislation resuming eligibility went into effect.
While companies have added workers to their payrolls seven straight months, firings have remained elevated as the economic recovery shows signs of slowing. Private firms added 71,000 jobs in July, fewer than economists had forecast, according to government figures released Aug. 6.
CareFusion Corp., the maker of products to reduce hospital infections and monitor medical safety, said Aug. 10 it will cut about 700 jobs as part of a restructuring designed to eliminate layers of management and lower costs. The San Diego-based company employs more than 15,000 people, it said this week, and was spun off last year from Cardinal Health Inc.
Help for States
Congress this week passed legislation providing $26 billion in aid to state governments that is designed to prevent thousands of layoffs of teachers and other public service employees.
Weaker sales and declining income tax revenue have left states with budget gaps totaling $84 billion, according to the National Conference of State Legislatures. Every state except Vermont is required to balance its budget, forcing spending cuts, tax increases or both -- actions Fed Chairman Ben S. Bernanke said last week are contributing to the nation’s sluggish recovery.
The Fed on Aug. 10 held its benchmark interest rate at a record low and announced it will reinvest principal payments on mortgage holdings into long-term Treasury securities, an effort to bolster economic growth.
“The pace of economic recovery is likely to be more modest in the near term than had been anticipated,” the Federal Open Market Committee said in a statement in Washington. “To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level.”