Jobless Claims in U.S. Unexpectedly Rose Last Week (Update1)
By Courtney Schlisserman
June 17 (Bloomberg) -- The number of Americans seeking jobless benefits last week unexpectedly rose to a one-month high, indicating firings are staying elevated even as the U.S. economy grows.
Initial jobless claims increased by 12,000 to 472,000 in the week ended June 12, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected 450,000 claims, according to the median forecast. The number of people receiving unemployment insurance rose, while those getting extended benefits dropped.
Some companies are trimming payrolls to boost or maintain profits at the same time overall employment has grown each month this year. The figures show that bigger job gains needed to spur consumer spending, which accounts for 70 percent of the economy, may be slow in developing, keeping the unemployment rate close to 10 percent.
“The labor market is not improving,” said Steven Ricchiuto, chief economist at Mizuho Securities USA Inc. in New York. “If you really are going to have a sustainable recovery, you need the labor market to improve.”
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates. Today’s report coincides with the week the government surveys companies for its monthly employment report.
Consumer Prices
Separate figures from the Labor Department showed consumer prices fell in May for a second month. The consumer price index dropped 0.2 percent, the biggest decrease since December 2008 and reflecting cheaper gasoline.
Stock-index futures pared gains after the report. The contract on the Standard & Poor’s 500 Index rose 0.1 percent to 1,110.7 at 8:42 a.m. in New York. The yield on the 10-year Treasury note dropped to 3.25 percent from 3.26 late yesterday.
Economists forecast jobless applications would fall from an initially reported 456,000 for the prior week, according to the median of 42 projections in a Bloomberg survey. Estimates ranged from 440,000 to 475,000.
States reporting higher initial claims last week said there were cutbacks in the manufacturing, construction and educational services industries, a Labor Department spokesman said. Claims tend to rise following a holiday and seasonal factors anticipated a smaller gain than what occurred, the spokesman said.
Four-Week Average
The four-week moving average, a less volatile measure than the weekly figures, fell to 463,500 last week from 464,000, today’s report showed.
The number of people continuing to receive jobless benefits increased by 88,000 in the week ended June 5 to 4.57 million. They were forecast to rise to 4.5 million after slumping 234,000 the previous week.
The continuing claims figure does not include the number of Americans receiving extended or emergency benefits under federal programs. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 169,000 to 5.22 million in the week ended May 29.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 3.6 percent in the week ended June 5 from 3.5 percent.
States Reporting
Thirty-eight states and territories reported a decrease in claims, while 15 reported an increase. These data are also reported with a one-week lag.
Claims around 450,000 are consistent with private companies adding about 100,000 jobs a month, JPMorgan Chase & Co. chief economist Bruce Kasman said in a note to clients before today’s report. That is fewer than the 116,000 a month average growth in the five years to December 2007, when the recession began.
Initial claims would have to average 425,000 to 430,000 for private payrolls to rise by the 175,000 a month that JPMorgan economists are forecasting for the second half of the year, Kasman said.
Dot Hill Systems Corp., a Longmont, Colorado-based software maker, said June 15 it will eliminate about 10 percent of its global workforce and also cut the annual base salaries of its vice president and executive management teams by the same amount. Other employees face a potential 5 percent reduction in annual base pay.
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