US Jobless Claims
Rise To 350,000
(Bloomberg) -- The number of Americans filing first- time applications for jobless benefits rose last week to a two- month high, reflecting temporary layoffs in the automobile industry, the government reported.
Initial claims increased by 25,000 last week to 350,000, the Labor Department said today in Washington. The level is the highest since the week ended March 26.
"A part of the increase you are seeing is attributable to temporary layoffs in the auto industry," a Labor Department spokesman said. The layoffs represented "a significant portion" of the rise in the number of filings, he said.
Ford Motor Co., the nation's No. 2 automaker, said yesterday it will lower North American third-quarter production to clear out excess inventory. Even with the increase last week, claims have averaged 328,000 so far this year, down from 343,000 for all of 2004, when the labor market was the strongest in five years.
"The loss of auto jobs is not good news but it is not big enough to affect the macro scene and claims will revert to their prior trend of 320,000 to 330,000 over the next couple weeks," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.
Companies are retaining employees and adding workers to meet demand, economists said. Consumer confidence rebounded last month, and incomes grew the most this year in April, giving a likely boost to spending.
"There's no doubt that companies are hiring," Anthony Chan, a senior economist at JP Morgan Asset Management in Columbus, Ohio, said before the report.
The Labor Department is expected to report tomorrow that U.S. payrolls expanded by 175,000 workers last month, according to a Bloomberg News survey of economists. That would follow the addition of 274,000 workers in April.
The median forecast in a Bloomberg News survey of 38 economists called for claims to rise to 325,000 from an originally reported 323,000. Estimates ranged from 315,000 to 331,000.
The four-week moving average of claims, a less-volatile measure, rose to 334,500 from 331,000. An average of initial claims between 325,000 and 330,000 coincides with the monthly addition of about 200,000 jobs, according to Chan.
A sustained level of 350,000 weekly claims ``would mean we could expect to see monthly employment gains of 100,000 to 130,000 instead of the 170,000 to 200,000 range we've been seeing,'' said John Silvia, chief economist at Wachovia Corp. in Charlotte.
In a separate report today, the Commerce Department reported that first-quarter productivity grew at a 2.9 percent annual rate, compared with 3.8 percent in the first three months of 2004. Productivity limits payroll gains by allowing companies to meet greater demand with the same workforce.
Continuing Claims
The number of people continuing to collect state jobless benefits increased to 2.602 million in the week that ended May 21 from 2.57 million the prior week. The four-week moving average of continuing claims rose to 2.591 million, from 2.586 million.
The insured unemployment rate, which tends to move with the U.S. unemployment rate, held at 2 percent the week that ended May 21.
Twenty-six states and territories reported a decrease in claims in the week before last, while 26 had an increase. Continuing claims, the insured unemployment rate and individual state data are reported with a one-week lag to initial claims.
An improving labor market helped boost consumer confidence, which rose last month for the first time since January, the New York-based Conference Board said May 31. The proportion of consumers who saw jobs as plentiful increased to 22.6 percent from 20.4 percent. The share expecting more jobs to be available six months from now increased to 14.9 percent from 14 percent.
"Consumer confidence is actually a better barometer of the labor market than consumer spending because it reflects people's perceptions about how easy it is to get a job," said Chan.
Trucking and coal companies are among those planning to add workers.
U.S. shippers need 20,000 more long-haul drivers and must raise wages about 7 percent to attract enough people to keep up with freight demand, the American Trucking Associations said last week. Members of the trade group include Yellow Roadway Corp., the largest trucking company.
Consol Energy Inc., the third-largest U.S. coal producer, submitted permit applications last week for a $500 million mine expansion that it said will create 400 jobs. The project near Washington, Pennsylvania, is slated to start next year and increase the mine's capacity by about 70 percent, according to the Pittsburgh company.
Jack Guynn, president of the Federal Reserve Bank of Atlanta, said last week that while the employment picture is improving, it's uneven.
'Some Weaknesses'
"The labor market still has some weaknesses," Guynn said in a speech in Atlanta. "The average duration of unemployment remains stubbornly high, at about 20 weeks, compared with less than 13 weeks during the hiring boom of the 1990s. This information suggests that some people continue to have a hard time finding that right job."
Parexel International Corp., which does research for drug companies, plans to save $10 million a year by eliminating 150 jobs or moving them outside the U.S. The company, based in Waltham, Massachusetts, announced the moves yesterday.
Manufacturers may start cutting payrolls at a faster pace. The Institute for Supply Management reported yesterday that its index of factory employment showed contraction for the first time since October 2003. Factories already have reduced employment for seven of eight months, according to figures from the Labor Department.
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