Thursday, February 5, 2009
Jobless Claims Climb Over 600,000 as of 02/05/2009
--weekly unemployment new clims soard pat 600k, highest level since 1982 --continuing claims rise to 4.788 mil, the highest level since 1967 --unemployment rate for those without unemplyment insurances are 3.6% --non-farm employment rate 3.2% By BRIAN BLACKSTONE WASHINGTON -- The number of U.S. workers filing new claims for jobless benefits soared past the 600,000 mark last week, reaching its highest level since the 1982 recession in the latest sign that the labor market downturn is deepening. Separately, U.S. productivity accelerated sharply last quarter despite the steepest economic contraction in over 25 years, a sign of just how quickly companies have responded to the recession by cutting back on labor at the fastest rate since the mid 1970s. Total jobless claims lasting more than one week hit a record high, suggesting it is getting much harder for the unemployed to find new work. Employment Rates Initial claims for jobless benefits rose 35,000 to 626,000 after seasonal adjustments in the week ended Jan. 31, the Labor Department said in a weekly report Thursday. Last week's level was the highest since October 1982. Economists surveyed by Dow Jones Newswires had expected claims would only rise by 2,000. One year ago, new claims were only running in the low- to mid-300,000 range. The four-week average of new claims, which aims to smooth volatility in the data, jumped 39,000 to 582,250, the highest since December 1982. The U.S. lost jobs every month of 2008, and employers slashed payrolls at a rate of about half a million per month in the final four months of the year. This month's claims figures point to another drop of that magnitude when January data are released Friday. That would push the jobless rate another 0.3 percentage point higher to 7.5%. Indeed, the hemorrhaging of jobs shows no sign of abating. A slew of household-name companies announced significant layoffs last month. Many firms are also instituting salary freezes to hold costs down in the face of weakening demand. That combination, while allowing businesses to cut costs, threatens consumer spending, which makes up about 70% of overall economic activity. Layoffs Pile Up See recent major job cuts in selected industries. Meanwhile, according to Thursday's report the tally of continuing claims -- those drawn by workers collecting benefits for more than one week in the week ended Jan. 24 -- rose 20,000 to 4,788,000. That's the highest level since the government started keeping track in 1967. The unemployment rate for workers with unemployment insurance remained at a 25-year-high of 3.6%. Not adjusted to reflect seasonal fluctuations, Wisconsin reported the largest increase in new claims during the Jan. 24 week, 1,355, due to layoffs in construction, trade and manufacturing industries. Florida reported the largest decrease, 14,703, due to fewer layoffs in construction, trade, service and manufacturing sectors. Productivity Rose in Fourth Quarter The productivity figures, which included a tame rise in labor costs, suggests the economy's underlying capacity to grow at healthy rates remains intact, bolstering hopes for a recovery once downturns in housing, financial and labor markets recede. Non-farm business productivity jumped 3.2%, at an annual rate, in the fourth quarter, the Labor Department said Thursday, well above the 2% increase economists in a Dow Jones Newswires survey had expected. Unit labor costs -- a key gauge of inflationary pressures -- advanced just 1.8%, at an annual rate. Wall Street economists had forecast a 3% increase. Labor costs were up just 0.7% from one year ago, an indication that the economic slowdown and weakening jobs market is making it hard for workers to command higher wages. Last year productivity bucked its usual pro-cyclical nature -- up in good times and down in slumps -- by strengthening in the face of recession. Productivity swelled 2.8% on average during 2008 -- the highest in five years -- and was up 2.7% compared to the fourth quarter of 2007. Those are above the average 2.5% growth rate between 2000 and 2008. Of course, there's a dark side in the short term to fast productivity: labor markets are likely to stay under severe pressure as companies cut back rapidly on labor in response to the demand slowdown. The U.S. lost jobs in every month last year, a total of 2.6 million. Nearly two million of those were in the last four months alone. Initial jobless claims soared past the 600,000 mark last week to their highest level since the 1982 recession, suggesting another steep drop in employment when January figures are released Friday. Non-farm business output fell 5.5% during the fourth quarter, the Labor Department said, the steepest decline since 1982. However, hours worked fell an even faster 8.4%, the biggest drop since 1975. Hourly compensation increased 5% last quarter. Real compensation, adjusted for inflation, jumped a record 15.6%, a sign that falling energy prices are increasing take-home pay.