First time jobless claims rise to 465,000
Posted September 23, 2010
WASHINGTON — First-time requests for unemployment benefits rose unexpectedly to 465,000.
That total is an increase of 12,000, which had been revised upward by 3,000 to 453,000, from last week.
The Labor Department says initial claims for jobless aid rose by 12,000 to a seasonally adjusted 465,000. Many economists had expected a flat reading or a small drop.
The rise suggests that jobs remain scarce and some companies are still cutting workers amid sluggish economic growth. Initial claims have fallen from a recent spike of more than half-million last month. But they have been stuck above the 450,000 level for most of the year.
The four-week average of claims, a less volatile measure, declined by 3,250 to 463,250. That’s the lowest level since the end of July, but down by only 4,000 since January.
New requests for jobless benefits had fallen by 54,000, or about 11 percent, in the past month. That drop followed a spike in claims to 504,000 in the week ending Aug. 14, which sparked fears of a renewed economic downturn.
The past month’s decline has quieted those fears. But it’s not clear whether the drop means the unemployment rate will also fall.
Economists at JPMorgan Chase forecast that initial unemployment claims fell by 5,000 to 445,000 last week, which would be the fourth drop in five weeks. A survey of economists by Thomson Reuters indicated expectations are that claims were unchanged at 450,000.
Thursday’s report covers the same week that the Labor Department surveys employers about their payrolls. Data from those surveys is used to compile the monthly jobs report and calculate whether the economy has gained or lost jobs.
Economists look at the change in unemployment claims figures from one month’s “survey week” to the next to try to get an early read on what the jobs report might say. If claims have fallen from one month to the next, that indicates layoffs have dropped and the unemployment rate might fall.
Claims have already fallen steeply from the Aug. 14 survey week. But economists note that last month’s figures could have been inflated by the thousands of temporary census workers whose jobs have ended in recent months. And the August data may have also been distorted by a shift in the timing of the auto industry’s summer plant closings, economists at Moody’s Analytics wrote in a note to clients.
As a result, claims may have fallen from an inflated level and may not translate into much improvement in the unemployment rate in September. The government will issue the September jobs report Oct. 8. The jobless rate rose to 9.6 percent in August from 9.5 percent the previous month.
Requests for jobless aid are still above levels that are found in a healthy economy. When hiring is robust and the economy is growing, claims fall below 400,000.
The initial claims figures, while volatile, are considered a real-time snapshot of the job market. Workers laid off through no fault of their own are eligible to request benefits. The weekly claims figures are considered a measure of the pace of layoffs and an indication of companies’ willingness to hire.
Claims have fallen sharply since June 2009, the month the recession ended. First-time claims topped 600,000 at the end of that month.
Some companies are still cutting jobs. Cessna Aircraft said Tuesday that it will lay off 700 workers because the economy hasn’t recovered as strongly as the company had hoped earlier this year. The latest reductions are on top of 8,000 jobs the company has shed since late 2008, reducing its work force by half.