More Americans than forecast filed claims for unemployment benefits last week, reflecting the volatility of applications during the annual auto-plant retooling period.
Applications for jobless benefits increased 10,,000 in the week ended July 16 to 418,000, Labor Department figures showed today. Economists forecast 410,000 claims, according to the median estimate in a Bloomberg News survey. The data included about 1,750 additional job cuts due to the Minnesota government shutdown, the agency said.
Employers have been reluctant to hire more workers over the past two months on concern the recovery was slowing and growing unease over stalled negotiations to extend the federal debt ceiling and reduce the budget deficit. Federal Reserve Chairman Ben S. Bernanke last week said recent data showed “continuing weakness” in the labor market.
“The labor market is still quite fragile,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets Corp. in New York, who correctly forecast the rise in claims. “The pace of firings continues to move sideways and it’s obvious there is not a lot of hiring going on. There is not a lot of demand right now.”
The four-week moving average of claims, a less-volatile measure, fell to 421,250, a three-month low, from 424,000.
Shares Rise
Stock-index futures held earlier gains after the report on better-than-estimated results AT&T Inc. and Morgan Stanley. The contract on the Standard & Poor’s 500 Index maturing in September climbed 0.6 percent to 1,329.3 at 8:45 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year up to 2.97 percent from 2.93 percent late yesterday.
Estimates for first-time claims ranged from 385,000 to 430,000 in the Bloomberg survey of 46 economists. The Labor Department initially reported the prior week’s applications at 405,000.
The timing of auto plant shutdowns to retool for the new model year have been difficult to predict this year, making adjusting the claims data for these seasonal variations more challenging, a Labor Department spokesman said as the figures were released to the press. Supply disruptions caused by the disaster in Japan may have prompted car markers to close operations earlier than usual that year.
Debt Negotiations
President Barack Obama and Congressional Democrats and Republicans have been racing to reach a debt-ceiling agreement by Aug. 2 that would avert a U.S. default. The Obama administration signaled this week it may accept a short-term increase in the $14.3 trillion debt limit if it is combined with a major agreement to cut the deficit.
The number of people continuing to collect jobless benefits fell by 50,000 in the week ended July 9 to 3.7 million. The continuing claims figure does not include the number of workers 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 133,000 to 3.7 million in the week ended July 2.
The unemployment rate among people eligible for benefits decreased to 2.9 percent in the week ended July 9 from 3 percent, today’s report showed. Forty states and territories reported an increase in claims, while 13 had a decrease.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Payroll Slowdown
Job gains have slowed in the past two months, raising concern about the durability of a labor market recovery. Payrolls expanded by 18,000 workers last month, the smallest gain since September, after increasing by 25,000 in May, Labor Department data showed July 8. The jobless rate climbed to 9.2 percent, the highest this year.
Banks and manufacturers are among companies still cutting jobs.
Goldman Sachs Group Inc. (GS), the U.S. bank that makes most of its money from trading, said it will cut about 1,000 jobs after a plunge in fixed-income revenue that was bigger than analysts estimated.
“It looks like the environment’s going to be somewhat slower for the foreseeable future and so we decided it made sense at this point to cut some level of expenses,” Chief Financial Officer David A. Viniar told analysts during a conference call this week.
More Firings
State Street Corp. (STT), the third-largest custody bank, will cut an additional 850 jobs over the next 20 months after reporting earnings that missed analysts’ estimates, the Boston- based bank said this week. The cuts are on top of 1,400 reductions announced last year and scheduled to be completed by the end of this year.
Cisco Systems Inc. (CSCO), the largest networking-equipment maker, said it plans to eliminate about 6,500 jobs, or 9 percent of its full-time workforce, to help trim $1 billion in annual costs and step up profit growth.
The job cuts will come from across the company and aren’t concentrated in a single unit, said Karen Tillman, a company spokeswoman, said in an interview this week. She declined to provide a geographic breakdown of the reduction. The company said affected workers in the U.S., Canada and other countries it didn’t name will be notified in early August.(Bloomberg)
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