U.S. Initial Jobless Claims Rose 7,000 to 336,000 Last Week
bloomberg.com
June 1 (Bloomberg) -- The number of U.S. workers filing first-time applications for state jobless benefits unexpectedly rose to 336,000 last week, signaling the labor market is softening as the economy cools.
Initial jobless claims rose by 7,000 in the week that ended May 27, from the prior week's 329,000, the Labor Department said today in Washington. The four-week moving average, a less volatile measure, rose to 333,500, the highest since October, from 330,750 a week earlier. Claims rose in previous weeks because of a government shutdown in Puerto Rico that has now been resolved.
Housing has begun to drag down growth as sales and construction moderate, causing builders, mortgage companies and real estate agencies to dismiss workers. The firings may ripple through other industries, depriving the economy of the income needed to sustain spending. Companies probably added 170,000 workers to payrolls in May, less than the first-quarter average, economists forecast the Labor Department will report tomorrow.
``An upward trend has emerged in initial claims, consistent with the view that growth is shifting down,'' Haseeb Ahmed, an economist at JPMorgan Chase Bank in New York, said before the report.
Claims were expected to fall to 320,000, according to the median economist estimate. Excluding increases because of the shutdown in Puerto Rico last month, and hurricane-related filings last year, the number of claims was the highest in a year.
Estimates in the Bloomberg survey ranged from 310,000 to 337,000 claims for the week.
Continuing Claims
The number of people continuing to collect state jobless benefits rose to 2.433 million in the week that ended May 20 from 2.414 million a week earlier.
The unemployment rate among people eligible for benefits, which tends to track the U.S. jobless rate, remained at 1.9 percent in the week ended May 20. The Labor Department also said 28 states and territories reported an increase in new claims, while 25 reported a decrease. These data are reported with a one- week lag.
The Labor Department is also forecast to report tomorrow that the jobless rate held at 4.7 percent for a third month, matching the lowest since July 2001, and that average hourly earnings rose 0.3 percent in May.
Federal Reserve policy markers have said high resource utilization, meaning low unemployment and little spare capacity at factories, may cause wages to rise and fuel inflation.
Productivity
The productivity of U.S. workers accelerated last quarter and labor costs over the last year rose 0.3 percent, matching the previous quarter as the smallest 12-month gain in more than a year, the Labor Department reported separately. Smaller labor- cost gains will come as a relief to the Fed and may tip the balance in favor of holding interest rates steady when central bankers next meet on June 28-29, economists said.
While more jobs and rising wages may keep consumer spending from collapsing, near-record fuel prices, rising interest rates and a cooling housing market suggest purchases and the economy will slow, economists said.
By the end of the year, growth will cool to an annual rate of 3 percent from the 5.3 percent pace set in the first three months of 2005, according to the median estimate of economists surveyed last month by Bloomberg News.
Winnebago Industries Inc., the biggest U.S. motor-home maker, is among companies already experiencing more moderate demand.
Gasoline Prices
``Gas prices and the economy have slowed business down some,'' Bruce Hertzke, chief executive officer of Forest City, Iowa-based Winnebago, said in a May 26 interview. ``The entire industry is down about 19 percent,'' Hertzke said. He said the May-August period is the industry's busiest.
Housing is at the leading edge of the slowdown. Washington Mutual Inc., the biggest U.S. savings and loan, last week told 1,400 workers in Florida and Washington that they will lose their jobs as part of a restructuring announced in February. Chief Executive Officer Kerry Killinger in November said he planned to fire about 2,500 workers and close 10 of the Seattle-based thrift's loan-processing units to reduce costs amid a slowdown in the mortgage market.
Higher claims suggest payroll gains will slow and together the two measures provide a good indication of how the labor market is faring. |
