Claims for U.S. unemployment benefits unexpectedly rose last week, pushed up for a second time by a labor dispute at Verizon Communications Inc. (VZ)
Jobless claims climbed by 5,000 to 417,000 in the week ended Aug. 20, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected a drop in claims to 405,000, according to the median forecast. At least 8,500 applications were filed by workers at Verizon last week, compared with 12,500 the prior week, the agency said.
The report signals that excluding the communications dispute, companies are slowing the pace of firings, which may ease concern that consumers will cut back on spending. At the same time, an unemployment rate at 9.1 percent is a reminder that a sustained labor-market rebound has yet to develop two years into the economic recovery.
“The problem over the last 18 months to two years hasn’t been the layoff side,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “The real problem has been we’re not getting the normal pace of hiring” that comes with a recovery. “For all the talk of impending doom in the economy, there is still not a lot of evidence of that.”
Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in September rose 0.1 percent to 1,173.6 at 8:41 a.m. in New York. Treasury securities climbed, sending the yield on the benchmark 10-year note down to 2.27 percent from 2.30 percent late yesterday.
Jobless benefits applications were projected to fall from the 408,000 initially reported for the prior week, according to the median forecast of 46 economists in a Bloomberg survey. Estimates ranged from 395,000 to 416,000. The Labor Department revised the prior week’s figure up to 412,000.
New York-based Verizon said this week that 45,000 striking workers began returning to work on Aug. 22 while talks continue, a truce that may help the carrier avoid losses a prolonged walkout would have caused. Employees are returning while the two sides keep negotiating what the company called “major issues.”
Benefits, work flexibility and job security were among the matters that still need to be negotiated, Verizon said Aug. 20. Contracts that expired on Aug. 6 will remain in effect for an undefined period, Verizon said.
Today’s data showed the four-week moving average, a less- volatile measure than the weekly figures, increased to 407,500 last week from 403,500.
The number of people continuing to receive jobless benefits dropped by 80,000 in the week ended Aug. 13 to 3.64 million, the fewest since September 2008.
The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 20,400 to 3.64 million in the week ended Aug. 6.
The unemployment rate among people eligible for benefits fell to 2.9 percent in the week ended Aug. 13 from 3 percent, today’s report showed.
Nineteen states and territories reported an increase in claims, while 34 reported a decline. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Payrolls grew by about 95,000 in August, according to the median forecast of economists surveyed so far by Bloomberg before the Sept. 2 jobs report. That would compare with 117,000 in July which brought the average gain over the past three months to 111,000. Employment gains averaged 204,000 in the first four months of the year.
The weak labor market and concerns over slowing growth and falling asset prices will be foremost on the minds of central bankers and policy makers this weekend when they meet at the Federal Reserve’s annual symposium in Jackson Hole, Wyoming.
Fed Chairman Ben S. Bernanke tomorrow is due to give his keynote speech. Investors and economists will be listening for clues on whether the head of the central bank hints at additional measures to boost growth and jobs.
Mass layoff announcements have increased in recent weeks as companies brace for a possible extended slowdown in economic growth.
Bank of America, the biggest U.S. lender, will eliminate about 3,500 jobs this quarter to focus “on what we can control” amid market turmoil, said Chief Executive Officer Brian T. Moynihan. “It is tough to have to manage through reductions, but we owe it to our customers and our shareholders to remain competitive, efficient and manage our expenses carefully.”
The 50 largest banks around the world announced almost 60,000 job reductions through the first week of August, the fastest rate since 2008, according to data compiled by Bloomberg.
Federal, state and local governments continue to seek ways of cutting staff. The Postal Service this month circulated a proposal to cut 220,000 employees, 39 percent of full-time staff, by 2015.
Still, the process would need congressional permission and President Barack Obama’s signature on a law to break a labor contract with its largest union.
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