October 3, 2008 in Business

Jobless claims soaring

Economy, hurricanes propel rate to seven-year high
By CHRISTOPHER S. RUGABER Associated Press
 

At recession levels

Jobless claims are at elevated levels even excluding the hurricanes. Weekly claims have topped 400,000 for 11 straight weeks, a level economists consider a sign of recession.

WASHINGTON – Tight credit is taking a toll on manufacturing and jobs.

More people than expected queued up at the unemployment lines last week, and orders to U.S. factories plunged by the largest amount in two years, according to government data released Thursday.

New applications for unemployment benefits rose slightly last week to a seven-year high because of a weakening economy and the impact of Hurricanes Ike and Gustav, the Labor Department said Thursday.

The department reported that initial claims for jobless benefits increased by 1,000 to a seasonally adjusted 497,000, the highest since just after the Sept. 11 terrorist attacks seven years ago.

Meanwhile, the Commerce Department said Thursday that factory orders in August plunged by 4 percent compared to July, a much steeper decline than the 2.5 percent drop analysts expected and the biggest setback since a 4.8 percent plunge in October 2006.

The weakness was led by big declines in orders for aircraft, down 38.1 percent, and autos, which fell by 10.6 percent, the worst performance in nearly six years.

The hurricanes, which hit Texas and Louisiana earlier this month, added about 45,000 claims from the two states for the week ending Sept. 27, the department said.

The number of people continuing to receive benefits increased to 3.59 million, up 48,000 and the highest total in five years.

Jobless claims are at elevated levels even excluding the hurricanes. Weekly claims have now topped 400,000 for 11 straight weeks, a level economists consider a sign of recession. A year ago, claims stood at 324,000.

“There’s little doubt that the rising trend in jobless claims reflects a marked deterioration in job market conditions,” David Resler, chief economist at Nomura Securities, wrote in a note to clients.

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