Thursday, November 6, 2008

Jobless claims higher than expected

The number of Americans filing new claims for unemployment insurance last week was higher than economists expected, and the number continuing to collect benefits shot to a 25-year high.

The U.S. Department of Labor reported Thursday that initial filings for state jobless benefits reached 481,000 for the week ended Nov. 1.

While that was down 4,000 from the revised 485,000 reported the week before, it was above the 476,000 claims expected by economists surveyed by The prior week was revised up by 1,000 to 479,000.

The report shows the number of Americans continuing to collect unemployment benefits surged to 3,843,000, the highest level since 1983. The number increased by 122,000 for the week ended Oct .18, the most current data available. A year ago, the number stood at 2.59 million.

The 25-year high level of continuing claims outweighs the slight drop in initial jobless claims, according to Bob Brusca, economist at FAO Economics.

"It's a problem," he said. "The labor market is not looking good at all. The small back off, that's not great...initial claims have fulfilled any expectation you have of them for a normal or severe recession."

The four-week moving average of unemployment claims, used to smooth fluctuations in the data, remained unchanged at 477,000 from the previous week. A reading above 400,000 has been present during the past two recessions. A year ago, the four-week moving average was 324,000.

Last month, nearly 7,500 jobless claims were attributed to the effects of Hurricanes Ike and Gustav, but no such claims were reported this week.

The number of jobless claims spiked in late September to 499,000, the highest level recorded since the 517,000 claims filed in wake of Sept. 11 terrorist attacks.
Job cuts

On Wednesday, a private outplacement firm reported that last month had the highest number of pink slips handed out since January 2004. The job cut announcements soared to 112,884, up 19% from September's 95,094 cuts, according to Challenger, Gray & Christmas Inc.

Separately, payroll manager ADP said the private sector lost a seasonally adjusted 157,000 jobs last month - more than six times September's decrease and the largest drop since December 2001.

The Department of Labor's monthly unemployment report due Friday is expected to show that 200,000 jobs were lost in October and that the unemployment rate grew to 6.3% from 6.1% a month earlier.

President-elect Barack Obama has put forth a few economic stimulus proposals, which may gain bipartisan support.

Some of his ideas include temporarily exempting the unemployed from having to pay income tax on their unemployment benefits, extending unemployment benefits, spending more on infrastructure to create jobs, and temporary tax credits for businesses that create jobs in the United States.

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