U.S. Initial Jobless Claims Rose by 25,000 to 584,000 Last Week

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By Courtney Schlisserman

July 30 (Bloomberg) -- The number of Americans filing claims for jobless benefits last week held below levels seen in late June, before auto-related distortions set in, indicating firings are slowing as the economy stabilizes.

Applications rose by 25,000 to 584,000 in the week ended July 25, higher than forecast, figures from the Labor Department showed today in Washington. More than 600,000 claims were filed every week last month. The number of people collecting unemployment insurance decreased for a third week.

An analyst at Labor said distortions from the timing of auto-plant shutdowns ‘worked themselves out’ of the data last week, returning claims to “trend.” While a resumption in hiring will be slow to materialize, payroll reductions are likely to slow as housing and manufacturing, the areas that led the economy into the worst recession in five decades, steady.

“There’s some improvement in claims,” Maxwell Clarke, chief U.S. economist at IDEAglobal in New York, said before the report. “It’s gradual, but considering where we’re coming from it’s not bad.”

Economists forecast claims would increase to 575,000 from a previously estimated 554,000, according to the median of 40 projections in a Bloomberg News survey. Estimates ranged from 539,000 to 630,000.

The four-week moving average, a less-volatile measure than weekly initial claims, fell to 559,000 from 567,250 the prior week. The average at the end of June, before the auto distortions set in, was 616,000, higher than last week’s reading.

Auto Distortions

Claims tend to be volatile in late June and July when automakers typically halt production and idle workers to re- equip factories to build new models. General Motors Co. and Chrysler Group LLC halted production earlier than usual as they worked through bankruptcy proceedings.

GM emerged from bankruptcy this month and Chrysler did the same in June.

The level of continuing claims decreased by 54,000 to 6.197 million in the week ended July 18, the lowest level since April. Because they come out with a one-week lag, these figures are still being distorted by the plant closings.

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 4.7 percent in the week ended July 18. Eight states and territories reported an increase in new claims, while 45 reported a decrease. These data are also reported with a one-week lag.

Payroll Survey

Figures for the week ended July 18 coincide with the week the Labor Department conducts its survey for the monthly payrolls report. U.S. employers have eliminated 6.5 million positions since the recession began in December 2007, the most of any downturn since the Great Depression.

Economists have forecast that the worst of the job cuts may have past. Even so, hiring is limited and economists surveyed by Bloomberg earlier this month project the jobless rate will exceed 10 percent by early 2010.

The U.S. economy is nearing its low point and will begin a “gradual, slow, plodding,” rebound next year, Southern Co. Chief Executive Officer David Ratcliffe said yesterday in an interview. “For the most part we believe that this has stabilized and is poised for a recovery.”

Southern, the biggest U.S. power producer, said second- quarter earnings rose 15 percent as lower costs cushioned the impact of declining electricity demand.

Verizon Communications Inc. is among companies still paring staff. It said July 27 it plans to eliminate more than 8,000 jobs in the second half.

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