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Initial jobless claims jump more than expected

associated press

New claims for jobless benefits surged last week and came in worse than expectations that were already gloomy.

Initial applications for unemployment benefits rose to a seasonally adjusted 573,000, the Labor Department said Thursday. That was nearly 50,000 more than economists were expecting and up from a revised 515,000 the week before.

The last time so many Americans filed new jobless claims in a single week was in 1982. The labor force has grown by about half since then.

Adding more damage to the labor market, Bank of America Corp. said it expected to cut as many as 35,000 jobs over the next three years, including some from investment bank Merrill Lynch & Co., which it agreed to buy in September.

Separately, the U.S. trade deficit rose unexpectedly in October, partly because of weakened demand for American exports. The gap was $57.2 billion in October, up from $56.6 billion in September.

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Besides Bank of America’s announcement, more layoffs in other industries were announced Thursday. Tool maker Stanley Works said it planned to cut 2,000 jobs and close three manufacturing facilities.

Sara Lee Corp., whose food brands include Jimmy Dean and Hillshire Farm, said it would cut 700 jobs as it outsources parts of its business.

The four-week average of new jobless claims, which smooths out fluctuations, is now a seasonally adjusted 540,500. That’s the highest since December 1982, when the economy was emerging from a deep recession.

The number of people continuing to claim jobless benefits also jumped much more than expected, increasing by 338,000 to 4.4 million, the department said. Economists had expected a small increase to 4.1 million.

That figure indicates that workers are having a harder time finding a job, economists said.

As a proportion of the workforce, the number of people continuing to receive benefits is the highest since August 1992, when the U.S. was recovering from a relatively mild recession.

Economists consider jobless claims a timely, if volatile, indicator of the health of the labor markets and the broader economy. A year ago, initial claims stood at 337,000.

The Labor Department said last week that employers cut a net 533,000 jobs in November and the unemployment rate reached 6.7%, a 15-year high. The latest jobless claims figures indicate that the December report could be just as bad or worse, Abiel Reinhart, an analyst at JPMorgan Chase & Co., wrote in a client note.


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