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New jobless claims down again, or are they?
Temporary shutdowns at auto plants are skewing government's numbers
AP Photo
Job-hunters at a career fair in Philadelphia. Unadjusted numbers for last week show more jobless claims.
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Published: July 17, 2009
WASHINGTON - The number of newly laid-off Americans signing up for unemployment benefits fell last week, as did the number of people using the benefits over a longer period. But the government figures released yesterday were clouded by difficulties adjusting for temporary shutdowns at auto plants.
Even if the recession ends this year as the Federal Reserve and many private economists expect, companies are expected to keep trimming payrolls. The unemployment rate will climb because companies won't be in any mood to hire until they feel certain a recovery is firmly rooted.
The Labor Department said that new applications for unemployment insurance dropped by a seasonally adjusted 47,000 to 522,000, the lowest level since early January. Economists polled by Thomson Reuters expected claims to rise to about 575,000.
A department analyst said that the drop in new claims didn't point to improvements in economic conditions. The second straight weekly decline reflected problems adjusting layoffs for temporary shutdowns at General Motors and Chrysler plants to retool for new models.
Weekly claims remain far above the roughly 325,000 that analysts say is consistent with a healthy economy. New claims last fell below 300,000 in early 2007. The lowest level this year was 488,000 for the week ended Jan. 3.
The unadjusted figures for last week actually showed that new claims rose by 86,389, which would push the total to 667,534.
The department's seasonal adjustment process expected a large increase in claims from auto workers and some other manufacturers, the analyst said. Since that didn't happen, seasonally adjusted claims fell.
Those adjustment difficulties also were behind a big drop reported for people continuing to draw unemployment benefits, the analyst said.
The number of people still collecting benefits fell by a seasonally adjusted 642,000 to 6.27 million, the lowest level since mid-April.
The unadjusted figures for continued claims showed an increase of 63,714. That data lags initial claims by a week. Initial claims staying well below 600,000 in August would indicate some fundamental improvement in a still-weak jobs market.
"That would be a clear sign that layoffs are slowing down," said Stuart Hoffman, the chief economist at PNC Financial Services Group.
When federal and state emergency programs are included, the total benefit rolls are higher. More than 2.8 million are receiving unemployment insurance under the programs, which add up to 53 weeks of benefits on top of the typical 26 weeks. The data for the emergency programs lags the initial claims by two weeks. About 9.1 million people received jobless benefits the week ending June 27.
The layoffs picture is expected to be muddied by the auto shutdowns in the weeks ahead, the department analyst and private economists said.
In the layoffs report, among the states, Michigan reported the largest increase in initial claims, with 12,144, which it attributed to higher layoffs in most industries. The next largest increases were reported by New York, Wisconsin, Indiana and Ohio. The state data lags initial claims by one week.
New Jersey reported the largest decrease, with 5,030, which it attributed to a shorter work week and fewer layoffs in the transportation, trade, service and warehousing industries. California, North Carolina, Kansas and Oregon reported the next largest drops.
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