Jobless claims are totally F*d up
Initial Jobless Claims Fell by 39,000 to 310,000 (Update1)
July 8 (Bloomberg) -- The number of U.S. workers filing new claims for jobless benefits fell by 39,000 last week to 310,000, the lowest since October 2000, the government said, adding that the numbers may be distorted because of difficulties adjusting for seasonal shutdowns at auto plants.
Last week's decrease was the biggest since the week that ended Dec. 8, 2001, the Labor Department said in Washington. The four-week moving average of claims, a less-volatile indicator than the weekly numbers, fell to 336,000, the lowest since the week that ended May 22.
Jobless-claims numbers are hard to interpret in July because automakers shut plants to retool for new models and autoworkers not eligible for vacation pay may apply for unemployment benefits. A Labor Department report on Friday showed June payroll gains below economists' forecasts. Economists forecast improved job growth in coming months as companies try to catch up with increased demand.
``Every summer we have the distortion from the auto shutdowns, so you can't extract a lot from the report,'' Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, said. ``When the dust settles, payrolls will be at 150,000 to 175,000 a month on average, and that's enough to keep the recovery alive.''
Action Economics predicted that claims would drop to 310,000.
Automakers shut down fewer plants than the Labor Department had anticipated during the week. Statisticians had adjusted the numbers for an expected increase of 76,000 claims due to shutdowns. The unadjusted number rose by only 33,000 instead, contributing to the large decline in the adjusted number to fall, a Labor Department spokesman said.
Expectations
Economists had expected claims to fall last week to 341,000 from 351,000 initially reported for the previous week, based on the median of 44 forecasts in a Bloomberg News survey. Estimates for last week ranged from 300,000 to 360,000.
The 4 3/4 percent Treasury note maturing in May 2014 fell almost 1/8 point. The yield rose 1 basis point to 4.89 percent.
The number of people continuing to collect state jobless benefits fell by 85,000 to 2.872 million in the week that ended June 26 from a revised 2.957 million a week earlier. The statistics are reported with a one-week lag to initial claims.
The four-week moving average for continuing claims rose to 2.918 million from 2.916 million.
The insured unemployment rate, which tends to move with the jobless rate, held at 2.3 percent in the week that ended June 26. Thirty-five states and territories reported a decrease in new claims, while 18 had an increase.
Shutdowns
Automakers scheduling shutdowns last week included Ford Motor Co., which said it would close a Chicago plant to change over production of its Ford 500, Ford Freestyle and Mercury Montego models. The plant has 2,213 workers.
The U.S. added 112,000 jobs in June, less than half the previous month's gain, the Labor Department reported Friday.
Rock-Tenn Co. and some other companies are still trimming payrolls to contain expenses.
U.S. employers announced plans in June to cut 64,343 jobs, a 7.8 percent increase from the year-earlier month, led by dismissals at financial services and telecommunications companies, according to a survey compiled by Challenger, Gray & Christmas Inc., a Chicago-based placement firm. Last month's total was the lowest since a year earlier and was 12 percent less than the 73,368 announced in May, Challenger said.
The figures aren't adjusted for seasonal variations, making month-to-month comparisons difficult.
Job Cuts
Rock-Tenn, which makes paper cartons and recycled paperboard, will close its Otsego, Michigan, plant and cut 110 jobs. Slowing demand, ``uneconomic'' price levels and high fiber and energy costs ``made it no longer feasible to operate these facilities,'' James A. Rubright, chief executive of the Norcross, Georgia, company, said in a statement yesterday.
Delta Air Lines Inc., the third-largest U.S. carrier, is increasing its cost-cutting and will present a restructuring plan to its board in late August, Chief Executive Gerald Grinstein told employees of the Atlanta-based company last week.
Cars and light trucks sold at an annual rate of 15.4 million in June, down from 17.8 million in May, according to industry data adjusted by the Commerce Department.
The figures for auto sales may show that consumer spending, an engine of growth the past several quarters, is cooling, economists said. Some, including UBS Securities LLC and J.P. Morgan Securities Inc., trimmed their second-quarter growth forecasts last week after the report.
A Stronger Economy
Still, the U.S. has created 1.3 million jobs so far this year, the biggest six-month gain since December 1999-May 2000, and economists expect further gains in coming months. The U.S. lost an average of 5,000 jobs a month last year.
``The economy seems clearly to be in a much stronger position than it was a year ago or even at the beginning of this year,'' J. Alfred Broaddus Jr., president of the Federal Reserve Bank of Richmond, said. The economic expansion is ``solid and supported by strong growth in household income.''
Broaddus made his comments Tuesday at a conference sponsored by the Southeastern Association of Tax Administrators in Asheville, North Carolina.
``Our feeling is that the economy is improving steadily and that job growth will be better,'' said Alan Levan, chief executive officer of Levitt Corp., a Fort Lauderdale, Florida- based home builder, in an interview. ``It may not be a straight line upward, but the bias is generally toward improvement in the economy.''
The Fed raised its interest rate target for overnight loans between banks by a quarter percentage point to 1.25 percent on June 30 to help head off inflation. The increase was first since May 2000.
Profit Outlook
Rising profits make it possible for companies to add workers.
A higher percentage of U.S. companies saw profit margins widen in the quarter that ended June 30, according to a survey by the National Association for Business Economics. Forty-one percent of the 104 companies responding said they plan to increase hiring in the next six months, up from 34 percent in April, the quarterly survey found.
``By almost any measure -- output, employment, profit margins, capital spending -- this economy is strong,'' said Duncan Meldrum, association president and chief economist at Air Products and Chemicals Inc., of Allentown, Pennsylvania. |
