Claims for US unemployment benefits rose last week, a sign the labour market is struggling to gain traction more than two years after the recession ended.
Jobless claims rose by 2,000 to 414,000 in the week ended September 3, Labour Department figures showed. Economists surveyed by Bloomberg News projected a drop in claims to 405,000, according to the median forecast. The number of people on unemployment benefit rolls and those receiving extended payments fell.
Companies are stepping up the pace of firings, raising the risk that consumer spending will slow further. Job growth stagnated last month and the unemployment rate was unchanged at 9.1 per cent, the Labour Department reported last week. The Labour Department said there was no national effect from Hurricane Irene.
“Especially with the double-dip recession risk rising, firms are cutting labour costs,” Jeffrey Roach, chief economist at Horizon Investments in Charlotte, North Carolina, said before the report. “They are not quite ready to ramp up production and create the jobs needed for our struggling economy.”
Jobless benefits applications were projected to fall from the 409,000 initially reported for the prior week, according to the median forecast of 41 economists in a Bloomberg survey. Estimates ranged from 400,000 to 435,000.
There were no special circumstances affecting last week’s claims data, a Labour Department spokesman said as the figures were released. Due to the Labour Day holiday, California, Virginia, Hawaii and the District of Columbia were estimated for that day, the spokesman said.
Today’s data showed the four-week moving average, a less-volatile measure than the weekly figures, rose to 414,750 last week from 411,000.
The number of people continuing to receive jobless benefits fell by 30,000 in the week ended August 27 to 3.72 million.
The continuing claims figure does not include the number of Americans 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 78,500 to 3.6 million in the week ended August 20.
UNEMPLOYMENT RATE
The unemployment rate among people eligible for benefits remained unchanged at three per cent in the week ended August 27, today’s report showed.
Twenty-one states and territories reported an increase in claims, while 32 reported a decrease. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to fall as job growth — measured by the monthly non-farm payrolls report — accelerates.
Slowing job growth is adding to pressure on Federal Reserve Chairman Ben S Bernanke and President Barack Obama to rouse an economy that’s at risk of stalling two years after the last recession ended. Total payrolls were unchanged last month, the weakest reading since September 2010, the Labor Department said September 2.
President Obama, in a nationally televised speech set for later today, plans to propose sparking job growth by injecting more than $300 billion into the economy next year, mostly through tax cuts, infrastructure spending and direct aid to state and local governments, according to people familiar with the matter.
BANK DISMISSALS
Banks have been among companies announcing the biggest dismissals. Bank of America Corp, the biggest US lender, will eliminate about 3,500 jobs this quarter to focus “on what we can control” amid market turmoil, said Chief Executive Officer Brian T Moynihan on August 19. “We owe it to our customers and our shareholders to remain competitive.”
Other jobs are being lost through acquisitions or government downsizing. Comerica Inc, a Dallas-based bank holding company, is eliminating roughly 300 jobs, primarily in Houston, in connection with its July acquisition of Sterling Bancshares Inc, said spokesman Wayne Mielke in a telephone interview.
“Any time you get an acquisition like this, there is bound to be some workforce overlap,” said Mielke.
The US Postal Service said this week it may not have the cash to carry the mail beyond next August if Congress doesn’t let it take steps like ending Saturday delivery and withdrawing from a government health care plan. The Postal Service last month said it wants to eliminate 220,000 jobs, or 39 per cent of its full-time workforce, by 2015.
“If nothing is done, the Postal Service will run out of money and be forced to slash service and employees,” Senator Joseph Lieberman, a Connecticut independent and chairman of the Homeland Security and Governmental Affairs Committee, said at a hearing.
