Jobless Claims Rise to 365,000, Swayed by Auto-Plant Shutdowns

Thursday, 02 Aug 2012 08:34 AM

 

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The number of Americans filing applications for unemployment benefits rose last week, probably marking the final period in which the annual auto shutdowns affect the figures.

Jobless claims climbed by 8,000 to 365,000 in the week ended July 28, Labor Department figures showed Thursday in Washington. The median forecast of 47 economists surveyed by Bloomberg News called for an increase to 370,000.

Starting next week, the data should be clear of any influence from the annual auto plant retooling closures that make it difficult to adjust the data for seasonal variations, a Labor Department spokesman said as the report was released to the press.

Apart from the statistical noise, the job market may take time to heal as a global slowdown and looming U.S. fiscal policy changes in the world’s biggest economy keep employers reluctant to add workers. Unemployment above 8 percent is among reasons Federal Reserve policy makers said they would take new steps as needed to boost the expansion.

“Employment growth remains insufficient,” Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York, said before the report. “Firms will stay cautious on hiring because of the slowdown and uncertainty in the global and domestic economy.”

Futures Climb

Stock-index futures climbed after the report as investors reacted to comments from European Central Bank President Mario Draghi after the central bank left its benchmark rate unchanged. The contract on the Standard & Poor’s 500 Index maturing in September rose 0.5 percent to 1,377 at 8:34 a.m. in New York. Draghi said policy makers may take additional non-standard measures to help the region overcome the debt crisis.

Claims estimates in the Bloomberg survey ranged from 340,000 to 390,000.

The Labor Department revised the previous week’s figure up to 357,000 from an initially reported 353,000.

Another report Thursday showed employers announced fewer job cuts in July than the same month last year as dismissals eased at retailers, government agencies and some manufacturers.

Planned firings fell 44.5 percent from July 2011 to a 15- month low of 36,855, according to figures released by Chicago- based Challenger, Gray & Christmas Inc. The year-over-year decline in dismissals was the biggest since January 2011.

The four-week moving average for jobless claims, a less volatile measure than the weekly figures, fell to 365,500 last week, the lowest since March, from 368,250.

Jobs Forecast

The employment report for July, to be released tomorrow, is projected to show payrolls increased by 100,000 after an 80,000 gain in June, according to the Bloomberg survey median. The jobless rate, which has been stuck above 8 percent since February 2009, was probably at 8.2 percent for a third moth.

Thursday’s report showed the number of people continuing to receive jobless benefits dropped by 19,000 in the week ended July 21 to 3.27 million, a two-month low.

The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.

Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 46,500 to 2.55 million in the week ended July 14.

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 2.6 percent, Thursday’s report showed.

State Breakdown

Forty-seven states and territories reported a decline in claims, while five reported an increase. These data are reported with a one-week lag.

Initial jobless claims reflect weekly firings and tend to fall as job growth — measured by the monthly non-farm payrolls report — accelerates.

Ford Motor Co. said it would idle 13 U.S. plants for one week instead of two for its annual summer shutdown. The Dearborn, Michigan-based automaker on July 25 lowered its outlook for the year as ballooning losses in Europe overshadowed earnings in North America.

Businesses announcing job reductions last month included Cisco Systems Inc. The biggest maker of computer-networking equipment, said July 23 it plans to eliminate about 1,300 jobs, or 2 percent of the workforce, as Europe’s debt crisis and sluggish corporate spending threaten sales.

The cuts are part of a “continuous process of simplifying the company, as well as assessing the economic environment in certain parts of the world,” San Jose, California-based Cisco said in an e-mailed statement.

Fed Action

Fed officials, at the conclusion of a two-day meeting yesterday, left unchanged their statement that economic conditions would likely warrant holding the benchmark interest rate target near zero at least through late 2014.

The Federal Open Market Committee “will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability,” it said in a statement.

The group “expects economic growth to remain moderate over coming quarters and then to pick up very gradually.”

© Copyright 2014 Bloomberg News. All rights reserved.

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