New signs that the recession could be nearing a bottom emerged Thursday, as factory orders were far better than expected and the Dow industrials surged over 8,000 for the first time in two months.
The Commerce Department said orders for manufactured goods rose 1.8 percent in February, reversing six straight monthly declines and easily beating estimates of another drop. Other economic indicators came in better than expected Wednesday, including construction spending and pending home sales.
Meanwhile, world leaders meeting in London on Thursday pledged $1.1 trillion to global institutions such as the International Monetary Fund to combat the downturn. And the European Central Bank agreed to cut a key interest rate to a record low of 1.25 percent.
Still, the job situation remains grim. Traditionally, the labor market doesn't pick up until well after a recovery has started.
The monthly unemployment report due out Friday likely will be dismal, and new jobless claims reported Thursday were worse than expected.
The Labor Department said initial claims for unemployment insurance rose to a seasonally adjusted 669,000 from the previous week's revised figure of 657,000. That total was above analysts' expectations and the highest in more than 26 years, though the work force has grown by about half since then.
Financial stocks led a rally on Wall Street after the board that sets U.S. accounting standards gave banks and other companies more leeway when valuing assets and reporting losses. The Dow Jones industrial average added more than 290 points, or 3.8 percent, to 8,053 in afternoon trading, the first time it has risen above 8,000 since Feb. 10. Broader indices also surged.
Bank of America Chief Executive Ken Lewis also bolstered the financial markets when he told CNBC that the recession is "getting close to the bottom."
Still, economists said the jobless claims figures indicate that companies continue to lay off workers at a rapid pace.
"Claims are typically one of the very first indicators to signal economic recovery, and there is no sign of that in the data yet," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a client note.
The tally of laid-off workers claiming benefits for more than a week rose 161,000 to 5.73 million, setting a record for the 10th straight week. That also was above analysts' expectations and indicates that unemployed workers are having difficulty finding new jobs. The continuing claims data lag the initial claims by one week.
An additional 1.5 million people received benefits under an extended unemployment compensation program Congress approved last year. That's as of March 14, the latest data available. Jobless benefits typically last 26 weeks, but the federal government is paying for an additional 20 to 33 weeks of compensation under the extended program, depending on each state's unemployment rate.
As a proportion of the work force, the number of people on the jobless benefit rolls is the highest since May 1983. The four-week moving average of jobless claims, which smooths out weekly volatility, rose to 656,750, the highest since October 1982, when the economy was emerging from a steep recession.
Employers are eliminating jobs and taking other cost-cutting measures to deal with sharp reductions in consumer and business spending. The current recession, now in its 17th month, is the longest since World War II.
Economists forecast that Friday's report will show employers cut 654,000 jobs in March, while the unemployment rate increased to 8.5 percent from 8.1 percent, according to a survey by Thomson Reuters.
Some economists raised their projection for job losses in March in response to the increase in claims. David Resler, chief economist at Nomura Securities International, said he now expects the department will report payroll cuts of 725,000 in March, up from a previous forecast of 680,000.
Companies reduced their payrolls by 651,000 jobs in February, a record third straight month of job losses above 600,000.
A private survey Wednesday said businesses cut 742,000 jobs in March. Employment at medium- and small-sized companies fell the sharpest — by a combined 614,000. The rest of the job cuts came from big firms — those with 500 or more workers_ according to the report from Automatic Data Processing Inc. and Macroeconomic Advisers LLC.
More job losses were announced this week. 3M Co., the maker of Scotch tape, Post-It Notes and other products, said Tuesday it's cutting another 1,200 jobs, or 1.5 percent of its work force, because of the global economic slump. Fewer than half the jobs will be in the U.S., but include hundreds in its home state of Minnesota. The 1,200 figure includes cuts made earlier in the first quarter.
Elsewhere, healthcare products distributor Cardinal Health Inc. said it would eliminate 1,300 positions, or about 3 percent of its work force, and semiconductor equipment maker KLA-Tencor Corp. said it will cut about 600 jobs, or 10 percent of its employees.
Among the states, California reported the biggest increase in new claims for the week ending March 21 with a jump of more than 6,700, which it attributed to layoffs in the construction and service industries. The next largest increases were in Missouri, Kansas, Oklahoma and Iowa, according to the Labor Department data.
The biggest drop was in Texas, which had 4,822 fewer claims as the trade, service, manufacturing and transportation industries cut fewer jobs. New York, Tennessee, Illinois and Virginia had the next largest declines.
The Federal Reserve has cut a key benchmark interest rate to nearly zero in an effort to jump-start lending and embarked on a series of radical programs to inject billions of dollars into the financial system.
The Obama administration's $787 billion stimulus package, approved by Congress in February, is trying to counter the recession by providing money for public works projects, extending unemployment benefits and helping states avoid budget cuts.
Showing posts with label unemployment report. Show all posts
Showing posts with label unemployment report. Show all posts
Thursday, April 2, 2009
Thursday, November 20, 2008
Jobless claims jump unexpectedly to 16-year high
New claims for unemployment benefits jumped last week to a 16-year high, the Labor Department said Thursday, providing more evidence of a rapidly weakening job market expected to get even worse next year.
The government said new applications for jobless benefits rose to a seasonally adjusted 542,000 from a downwardly revised figure of 515,000 in the previous week. That's much higher than Wall Street economists' expectations of 505,000, according to a survey by Thomson Reuters.
That is also the highest level of claims since July 1992, the department said, when the U.S. economy was coming out of a recession.
The four-week average of claims, which smooths out fluctuations, was even worse: it rose to 506,500, the highest in more than 25 years.
In addition, the number of people continuing to claim unemployment insurance rose sharply for the third straight week to more than 4 million, the highest since December 1982, when the economy was in a painful recession.
The financial markets fell on the news. The Dow Jones industrial average dropped about 160 points in morning trading, and broader indexes also fell.
The jobless figures come as the Senate is expected to vote Thursday on legislation that would extend unemployment benefits. The White House said President George W. Bush would quickly sign the bill.
The measure would provide seven additional weeks of payments to those who have exhausted their benefits. Those in states where the unemployment rate is above 6 percent would be eligible for an additional 13 weeks beyond the 26 weeks of regular benefits. Benefit checks average about $300 a week nationwide.
Without the legislation, its proponents say, 1.1 million people will have exhausted their unemployment insurance by the end of the year.
Elsewhere Thursday, the New York-based Conference Board said its monthly forecast of economic activity declined 0.8 percent in October, worse than the 0.6 percent decrease analysts expected. The economy's health worsened last month as stocks, building permits and consumer expectations all fell, the private research group said. Over the last seven months, the index declined at a 4.7 percent annual rate, faster than any decline since 2001.
The high level of continuing unemployment claims partly reflects growth in the labor force, which has increased by about half since the early 1980s. The percentage of workers continuing to receive benefits — which is different from the unemployment rate — increased to 3 percent, the highest since June 2003. Less than half of unemployed workers receive unemployment insurance.
Joshua Shapiro, chief U.S. economist at MFR Inc., a consulting firm, said the four-week average of continuing claims is 49 percent higher than it was a year ago. That "indicates that those who are unemployed are finding it increasingly difficult to get re-employed."
Shapiro wrote in a note that the number of claims indicates that net job reductions by employers could top 400,000 this month, up from 240,000 in October, when the unemployment rate reached 6.5 percent. Companies have cut 1.2 million jobs so far this year.
Many economists expect unemployment to reach 7 percent by early next year and 8 percent by the end of 2009. Last year the rate averaged 4.6 percent.
The Federal Reserve on Wednesday released projections that the jobless rate will climb to between 7.1 percent and 7.6 percent next year, according to documents from the Fed's Oct. 29 closed-door deliberations on interest rate policy.
Initial claims have been driven higher in the past several months by a slowing economy hit by the financial crisis, and cutbacks in consumer and business spending.
Economists consider jobless claims a timely, if volatile, indication of how rapidly companies are laying off workers. Employees who quit or are fired for cause are not eligible for benefits.
Companies from a wide range of sectors have announced layoffs recently, including Citigroup Inc., Union Pacific Corp., Boeing Co., Wyeth, Sun Microsystems Inc., and poultry maker Pilgrim's Pride Corp.
The government said new applications for jobless benefits rose to a seasonally adjusted 542,000 from a downwardly revised figure of 515,000 in the previous week. That's much higher than Wall Street economists' expectations of 505,000, according to a survey by Thomson Reuters.
That is also the highest level of claims since July 1992, the department said, when the U.S. economy was coming out of a recession.
The four-week average of claims, which smooths out fluctuations, was even worse: it rose to 506,500, the highest in more than 25 years.
In addition, the number of people continuing to claim unemployment insurance rose sharply for the third straight week to more than 4 million, the highest since December 1982, when the economy was in a painful recession.
The financial markets fell on the news. The Dow Jones industrial average dropped about 160 points in morning trading, and broader indexes also fell.
The jobless figures come as the Senate is expected to vote Thursday on legislation that would extend unemployment benefits. The White House said President George W. Bush would quickly sign the bill.
The measure would provide seven additional weeks of payments to those who have exhausted their benefits. Those in states where the unemployment rate is above 6 percent would be eligible for an additional 13 weeks beyond the 26 weeks of regular benefits. Benefit checks average about $300 a week nationwide.
Without the legislation, its proponents say, 1.1 million people will have exhausted their unemployment insurance by the end of the year.
Elsewhere Thursday, the New York-based Conference Board said its monthly forecast of economic activity declined 0.8 percent in October, worse than the 0.6 percent decrease analysts expected. The economy's health worsened last month as stocks, building permits and consumer expectations all fell, the private research group said. Over the last seven months, the index declined at a 4.7 percent annual rate, faster than any decline since 2001.
The high level of continuing unemployment claims partly reflects growth in the labor force, which has increased by about half since the early 1980s. The percentage of workers continuing to receive benefits — which is different from the unemployment rate — increased to 3 percent, the highest since June 2003. Less than half of unemployed workers receive unemployment insurance.
Joshua Shapiro, chief U.S. economist at MFR Inc., a consulting firm, said the four-week average of continuing claims is 49 percent higher than it was a year ago. That "indicates that those who are unemployed are finding it increasingly difficult to get re-employed."
Shapiro wrote in a note that the number of claims indicates that net job reductions by employers could top 400,000 this month, up from 240,000 in October, when the unemployment rate reached 6.5 percent. Companies have cut 1.2 million jobs so far this year.
Many economists expect unemployment to reach 7 percent by early next year and 8 percent by the end of 2009. Last year the rate averaged 4.6 percent.
The Federal Reserve on Wednesday released projections that the jobless rate will climb to between 7.1 percent and 7.6 percent next year, according to documents from the Fed's Oct. 29 closed-door deliberations on interest rate policy.
Initial claims have been driven higher in the past several months by a slowing economy hit by the financial crisis, and cutbacks in consumer and business spending.
Economists consider jobless claims a timely, if volatile, indication of how rapidly companies are laying off workers. Employees who quit or are fired for cause are not eligible for benefits.
Companies from a wide range of sectors have announced layoffs recently, including Citigroup Inc., Union Pacific Corp., Boeing Co., Wyeth, Sun Microsystems Inc., and poultry maker Pilgrim's Pride Corp.
Friday, November 7, 2008
Stocks higher despite jobs report
Stocks higher after jobs report come in dismal.
The Labor Department said the nation's employers cut 240,000 jobs in October, hurtling the U.S. unemployment rate to a 14-year high of 6.5 percent. The market had expected employers to cut 200,000 jobs and for the unemployment rate to rise 6.
Meanwhile, Ford reported dismal third-quarter results and announced plans to cut more than 2,000 additional white-collar jobs. General Motors is also expected to report results Friday.
Although the day's news was worse than expected, investors seemed to be attracted by stock prices beaten down the past two sessions.
Investors have been optimistic before, snapping up bargain stocks only to cash in the profits when jitters return. Barack Obama's election to the White House was preceded by a big rally, and then followed by a two-day loss of about 10 percent in the major indexes.
The Dow Jones industrial average gained 89.92, or 1.03 percent, to 8,785.71.
The broader Standard & Poor's 500 index added 8.40, or 0.93 percent, to 913.28, and the Nasdaq composite index rose 16.80, or 1.04 percent, to 1,625.50.
The jobless rate zoomed to 6.5 percent in October from 6.1 percent in September, matching the rate in March 1994.
Unemployment has now surpassed the high seen after the last recession in 2001. The jobless rate peaked at 6.3 percent in June 2003.
October's decline marked the 10th straight month of payroll reductions, and government revisions showed that job losses in August and September turned out to be much deeper. Employers cut 127,000 positions in August, compared with 73,000 previously reported. A whopping 284,000 jobs were axed in September, compared with the 159,000 jobs first reported.
So far this year, a staggering 1.2 million jobs have disappeared. Over half of the decrease occurred in the past three months alone.
Job losses were widespread, reflecting the mounting carnage from a trio of crises -- housing, credit and financial.
Factories cut 90,000 jobs, the most since July 2003. Construction companies got rid of 49,000 jobs with heavy losses in home building. Retailers cut payrolls by 38,000. Professional and business services reduced employment by 45,000. Financial activities cut 24,000 jobs, with heavy losses in mortgage banking and at securities firms. Leisure and hospitality axed 16,000 positions.
All those losses more than swamped some gains elsewhere, including in the government, as well as in education and health care.
Racing to assemble his new Democratic Cabinet, President-elect Barack Obama will huddle with economic advisers later on Friday. His team has been in close contact with the Bush administration to pave the way for a smooth hand-off of power.
All the economy's woes -- a housing collapse, mounting foreclosures, hard-to-get credit and financial market upheaval -- will confront Obama when he assumes office early next year. And, the employment situation is likely to get worse.
Many expect the jobless rate to climb to 8 percent, possibly higher, next year. In the 1980-1982 recession, the unemployment rate rose as high as 10.8 percent before inching down.
To provide fresh relief, House Speaker Nancy Pelosi said Democrats, in a lame-duck session later this month, are pushing to enact another round of economic stimulus of around $100 billion.
Average hourly earnings rose to $18.21 in October, a 0.2 percent increase from the previous month, according to the Labor Department report. Over the past year, wages have grown 3.5 percent, but paychecks aren't stretching that far because high food, energy and other prices has propelled overall inflation at a faster pace.
To prevent the country from sinking into a deep and painful recession, the Federal Reserve last week ratcheted down interest rates to 1 percent and left the door open to further reductions.
The economy has lost its footing in just a few months. It contracted at a 0.3 percent pace in the July-September quarter, signaling the onset of a likely recession. It was the worst showing since 2001 recession, and reflected a massive pullback by consumers.
As U.S. consumers watch jobs disappear, they'll probably retrench even further, spelling more trouble for the sinking economy.
That's why analysts predict the economy is still shrinking in the current October-December quarter and will contract further in the first quarter of next year. All that more than fulfills a classic definition of a recession: two straight quarters of contracting economic activity.
The Labor Department said the nation's employers cut 240,000 jobs in October, hurtling the U.S. unemployment rate to a 14-year high of 6.5 percent. The market had expected employers to cut 200,000 jobs and for the unemployment rate to rise 6.
Meanwhile, Ford reported dismal third-quarter results and announced plans to cut more than 2,000 additional white-collar jobs. General Motors is also expected to report results Friday.
Although the day's news was worse than expected, investors seemed to be attracted by stock prices beaten down the past two sessions.
Investors have been optimistic before, snapping up bargain stocks only to cash in the profits when jitters return. Barack Obama's election to the White House was preceded by a big rally, and then followed by a two-day loss of about 10 percent in the major indexes.
The Dow Jones industrial average gained 89.92, or 1.03 percent, to 8,785.71.
The broader Standard & Poor's 500 index added 8.40, or 0.93 percent, to 913.28, and the Nasdaq composite index rose 16.80, or 1.04 percent, to 1,625.50.
The jobless rate zoomed to 6.5 percent in October from 6.1 percent in September, matching the rate in March 1994.
Unemployment has now surpassed the high seen after the last recession in 2001. The jobless rate peaked at 6.3 percent in June 2003.
October's decline marked the 10th straight month of payroll reductions, and government revisions showed that job losses in August and September turned out to be much deeper. Employers cut 127,000 positions in August, compared with 73,000 previously reported. A whopping 284,000 jobs were axed in September, compared with the 159,000 jobs first reported.
So far this year, a staggering 1.2 million jobs have disappeared. Over half of the decrease occurred in the past three months alone.
Job losses were widespread, reflecting the mounting carnage from a trio of crises -- housing, credit and financial.
Factories cut 90,000 jobs, the most since July 2003. Construction companies got rid of 49,000 jobs with heavy losses in home building. Retailers cut payrolls by 38,000. Professional and business services reduced employment by 45,000. Financial activities cut 24,000 jobs, with heavy losses in mortgage banking and at securities firms. Leisure and hospitality axed 16,000 positions.
All those losses more than swamped some gains elsewhere, including in the government, as well as in education and health care.
Racing to assemble his new Democratic Cabinet, President-elect Barack Obama will huddle with economic advisers later on Friday. His team has been in close contact with the Bush administration to pave the way for a smooth hand-off of power.
All the economy's woes -- a housing collapse, mounting foreclosures, hard-to-get credit and financial market upheaval -- will confront Obama when he assumes office early next year. And, the employment situation is likely to get worse.
Many expect the jobless rate to climb to 8 percent, possibly higher, next year. In the 1980-1982 recession, the unemployment rate rose as high as 10.8 percent before inching down.
To provide fresh relief, House Speaker Nancy Pelosi said Democrats, in a lame-duck session later this month, are pushing to enact another round of economic stimulus of around $100 billion.
Average hourly earnings rose to $18.21 in October, a 0.2 percent increase from the previous month, according to the Labor Department report. Over the past year, wages have grown 3.5 percent, but paychecks aren't stretching that far because high food, energy and other prices has propelled overall inflation at a faster pace.
To prevent the country from sinking into a deep and painful recession, the Federal Reserve last week ratcheted down interest rates to 1 percent and left the door open to further reductions.
The economy has lost its footing in just a few months. It contracted at a 0.3 percent pace in the July-September quarter, signaling the onset of a likely recession. It was the worst showing since 2001 recession, and reflected a massive pullback by consumers.
As U.S. consumers watch jobs disappear, they'll probably retrench even further, spelling more trouble for the sinking economy.
That's why analysts predict the economy is still shrinking in the current October-December quarter and will contract further in the first quarter of next year. All that more than fulfills a classic definition of a recession: two straight quarters of contracting economic activity.
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