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New Unemployment Claims Rise More Than Expected

Above: Job seekers use computers to look for jobs at the Richmond Works One Stop Career Center July 17, 2009 in Richmond, California. California's unemployment rate reached 11.6 percent after 66,500 Californians became unemployed in June. The record unemployment rate is up 7.1 percent from one year ago.

— The number of newly laid-off workers filing first-time claims for jobless benefits rose last week, the government said, though the increase was mostly due to seasonal distortions.

The number of people remaining on the jobless benefit rolls, meanwhile, fell to 6.2 million from 6.25 million, the lowest level since mid-April.

The Labor Department said new claims for unemployment aid increased by 25,000 to a seasonally adjusted 584,000. That's above analysts' estimates of 570,000.

A department analyst said the increase comes after claims were artificially depressed earlier this month by the timing of temporary auto factory shutdowns, which happened earlier this year than in most years. Still, this week's total is below the 617,000 initial claims reported in late June before the seasonal distortions began. It reflects a trend that economists say indicates a slowing pace of layoffs.

The four-week average of claims, which smooths out fluctuations, fell to 559,000, its lowest level since late January.

But jobs remain scarce and the unemployment rate, which hit 9.5 percent for June, is expected to surpass 10 percent by year's end.

And weekly claims remain far above the 300,000 to 350,000 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 seasonal distortions are due to the fact that the auto companies shut their plants earlier than usual this year. Car makers normally close their factories in early July and temporarily lay off thousands of workers as they retool plants to build new car models.

Those shutdowns happened in May and June this year as General Motors Corp. and Chrysler LLC closed plants after filing for bankruptcy protection. That shift in timing caused new claims to fall sharply in the first two weeks of July. Claims are now rebounding from that artificial decline.

The recession, which started in December 2007 and is the longest since World War II, has eliminated a net total of 6.5 million jobs. The unemployment rate is expected to rise to 9.7 percent when the July figure is reported next week.

More job cuts were announced this week. Verizon Communications Inc. said Monday that it would cut more than 8,000 employee and contractor jobs before the end of the year.

Among the states, California had the biggest increase in claims, with 4,290, which it attributed to increased layoffs in the construction and trade industries. Michigan, Florida, Connecticut and Indiana had the next-largest increases. State data lags behind initial claims data by one week.

New York had the largest drop in claims, with 22,052, which it said was due to fewer layoffs in the service and transportation industries. Wisconsin, Missouri, Pennsylvania and Ohio had the next-largest declines.

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