New US weekly jobless claims ease

New US weekly jobless claims ease
By Alan Rappeport in New York
Copyright The Financial Times Limited 2009
Published: May 21 2009 14:31 | Last updated: May 21 2009 14:31
http://www.ft.com/cms/s/0/f520eefe-4608-11de-803f-00144feabdc0.html


The number of US workers claiming unemployment benefits for the first time eased last week, official figures showed on Thursday, but those continuing to claim climbed to a fresh record high.

New jobless claims declined by 12,000 to 631,000 in the week ending May 16, the labour department said on Thursday. The drop was less than economists expected and much of the reversal was the result of the spike in auto-related job cuts the week before due to the idling of Chrysler plants.

The less volatile four-week average for new claims fell by 3,500 to 628,500. Economists predict that a raft of job cuts from Chrysler, General Motors and their hundreds of dealers across the US will be another blow to the fragile labour market.

Nearly 20,000 of the new jobless claims for the week ending May 9 were due to the stricken auto industry, with 16,817 in Michigan, where Chrysler and GM are based. On Wednesday state figures revealed that Michigan’s unemployment rate rose to 12.9 per cent in April, the highest level since 1983. A labour department spokesman estimated that another 15,000 auto-related claims occurred last week.

The number of Americans still claiming unemployment continued to reach new heights, rising to 6.66m from a previous record of a revised 6.58m the week before. It was the 16th week running that the figure breached a record. Meanwhile, the insured unemployment rate rose by 0.1 percentage points to 5 per cent, the highest since 1982.

“The uncomfortable suggestion must be that the underlying pace of claims is not slowing as much as appeared to be the case a few weeks ago,” said Ian Sheperdson, chief US economist at High Frequency Economics.

Earlier this month the labour department reported that US unemployment climbed to 8.9 per cent in April, its highest level in a quarter of a century. Federal Reserve policymakers revealed in their latest meeting minutes on Wednesday that they project unemployment to be between 9 per cent and 9.5 per cent in the final quarter of 2010 and to remain at 7.7-8.5 per cent in the final quarter of 2011.

“The Achilles Heel of recovery is the labor market, which could put consumer spending under renewed downward pressure and spur another round of inventory liquidation,” noted John Ryding and Conrad DeQuadros, economists at RDQ Economics.

Since the recession began in December 2007, 5.7m jobs have been lost in the US.