More Americans than forecast filed applications for unemployment benefits last week, signaling the labor market is struggling two years into the economic recovery.
Jobless claims climbed by 9,000 to 408,000 in the week ended Aug. 13, the highest in a month, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected a rise in claims to 400,000, according to the median forecast. The number of people on unemployment benefit rolls rose, while those receiving extended payments fell.
Companies like Bank of New York Mellon Corp. are paring staff, one reason consumers are limiting their spending, which accounts for about 70 percent of the economy. Unemployment at 9.1 percent helps explain why Federal Reserve policy makers last week pledged to hold interest rates at a record low until at least mid-2013 to spur growth.
“People continue to get laid off,” David Semmens, a U.S. economist at Standard Chartered Bank in New York, said before the report. “The uncertainty in the economic outlook is continuing to give hiring managers sleepless nights and is keeping businesses from expanding. We have an incredibly long way to go” to get a healthy labor market, Semmens said.
Jobless benefits applications were projected to rise from the 395,000 initially reported for the prior week, according to the median forecast of 41 economists in a Bloomberg survey. Estimates ranged from 390,000 to 420,000.
Stock-index futures held earlier losses after the report. The contract on the Standard & Poor’s 500 Index maturing in September fell 2.2 percent to 1,163.40 at 8:39 a.m. in New York. The yield on the benchmark 10-year Treasury note fell to 2.1 percent from 2.17 percent late yesterday.
Today’s data showed the four-week moving average, a less-volatile measure than the weekly figures, dropped to 402,500 last week, the lowest since April 16, from 406,000.
The number of people continuing to receive jobless benefits climbed by 7,000 in the week ended Aug. 6 to 3.7 million.
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 43,700 to 3.66 million in the week ended July 30.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 2.9 percent in the week ended Aug. 6, today’s report showed.
Thirty-four states and territories reported an increase in claims, while 18 reported a decline. These data are reported with a one-week lag.
Businesses reducing headcount include Bank of New York Mellon Corp. The world’s largest custody bank plans to eliminate 1,500 jobs, or 3 percent of the workforce, after expenses surged in the second quarter. It will implement an immediate hiring freeze across most departments and reduce its use of temporary workers, consultants and contractors.
“Expenses have been growing unsustainably faster” than revenue, Robert Kelly, BNY Mellon’s chief executive officer, said in a statement on Aug. 10. “We expect our natural turnover and immediate hiring freeze will reduce the impact on existing staff” from the reductions.
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 117,000 in July, bringing the average gain over the past three months to 111,000, according to Labor Department data. That was about half the 204,000 increase on average in the first four months of the year.
The lack of a pickup in hiring and an economy that’s growing “considerably slower” than expected prompted Fed policy makers to pledge for the first time to keep the benchmark interest rate at a record low at least through mid-2013.
“Indicators suggest a deterioration in overall labor market conditions in recent months,” the Federal Open Market Committee said in a statement on Aug. 9 after its meeting. “The unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate” of maximum employment and price stability.