Thursday, May 21, 2009

Jobless Claims Rise, As the Recovery Continues -- Huh ?

There seems to be a mystery between what govenment says and what the economy does. More Americans than forecast filed claims for unemployment insurance last week, and the total number of workers receiving benefits rose to a record, signs the job market continues to weaken even as the economic slump eases -- Seems to be inconsistent doesn't it.

Initial jobless claims fell by 12,000 to 631,000 in the week ended May 16, from a revised 643,000 the prior week that was higher than initially estimated, the Labor Department said today in Washington. The total number of people collecting benefits rose to 6.66 million, a record reading for a 16th straight week, and a sign companies are still not hiring.

Job losses are likely to continue after Chrysler LLC filed for bankruptcy and General Motors Corp. may follow suit and terminate 1,100 U.S. dealers. The auto slump threatens to slow any recovery from the deepest recession in half a century and keep pushing unemployment higher.

``Layoffs associated with Chrysler's bankruptcy were likely the main factor'' behind the elevated claims levels, Ryan Sweet, a senior economist at Moody's in West Chester, Pennsylvania, said before the report. ``Troubles in domestic auto manufacturing could push claims even higher over the next several weeks.''

Economists surveyed by Bloomberg forecast claims would drop to 625,000 from the 637,000 initially reported for the prior week, according to median of 42 estimate. Projections ranged from 585,000 to 675,000.

The four-week moving average of initial claims, a less volatile measure, decreased to 628,500 from 632,000. Feel better now?

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