Total US jobless claims fall back - First decline since January, but new claims rise

Total US jobless claims fall back - First decline since January, but new claims rise
By Alan Rappeport in New York
Copyright The Financial Times Limited 2009
Published: June 18 2009 14:17 | Last updated: June 18 2009 14:17
http://www.ft.com/cms/s/0/e50ffce4-5c01-11de-aea3-00144feabdc0.html


The number of Americans claiming unemployment benefits fell for the first time since January, the labour department said on Thursday, raising hopes the worst could be over for the stricken job market.

Continuing jobless claims declined by 148,000 to 6.69m in the first week of June, more than economists expected and marking the biggest weekly drop since 2001. The total number of US workers claiming unemployment benefits had hit new record highs for 19 straight weeks.

However, new jobless claims ticked up last week, offering a reminder that any employment recovery will be slow and that companies are continuing to cull workers as they cope with diminished demand. Initial jobless claims rose by 3,000 last week to 608,000, as layoffs mounted in the construction and car industries.

The insured unemployment rate, which measures unemployment for those with insurance, slipped by one percentage point to 5 per cent during the first week of June. Last month the overall US unemployment rate hit 9.4 per cent, its highest level in 26 years, and most economists expect it to breach 10 per cent before falling back.

Economists were quick to warn that the path to recovery could still be treacherous. Joshua Shapiro, chief US economist at MFR, notes that the less volatile four-week moving average of continuing jobless claims is up by 117 per cent compared with the same week a year ago.

Earlier this week MySpace, once the world’s largest internet social network, said it would cut its US workforce by 30 per cent as it seeks to streamline its operations.

The four-week average of continuing claims rose last week by 2,250 to 6.76m. The monthly average for new claims fell by 7,000 to 615,000.

“With initial claims still very high at above 600,00, it is unlikely that new hiring has picked up in any meaningful fashion,” Mr Shapiro said. “More probable is that long-term unemployed are starting to fall off the rolls as the duration of their unemployment benefits reaches the statutory limit.”