August 13, 2010 in Business

Jobs outlook dims as claims rise

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WASHINGTON – The economy is looking bleaker as new applications for jobless benefits rose last week to the highest level in almost six months.

It’s a sign that hiring remains weak and employers may be going back to cutting their staffs. Analysts say the increase suggests companies won’t be adding enough workers in August to lower the 9.5 percent unemployment rate.

First-time claims for jobless benefits edged up by 2,000 to a seasonally adjusted 484,000, the Labor Department said Thursday. That’s the highest total since February. Analysts had expected claims to fall.

Initial claims have now risen in three of the last four weeks and are close to their high point for the year of 490,000, reached in late January. The four-week average, which smoothes volatility, soared by 14,250 to 473,500, also the highest since late February.

The report “represents a very adverse turn in the labor market, threatening income growth and consumer spending,” Pierre Ellis, an economist at Decision Economics, wrote in a note to clients.

The stock market has been falling since the Fed’s more pessimistic outlook. The Dow Jones industrial average dropped 58 points on Thursday and is down more than 300 points for the week.

Economists closely watch weekly claims, which are considered a gauge of the pace of layoffs and an indication of employers’ willingness to hire.

Thursday’s report on jobless claims indicates that trend may not change soon. Claims fell steadily last year from their peak of 651,000, reached in March 2009. But they have mostly leveled out this year at or above 450,000. In a healthy economy with rapid hiring, claims usually drop below 400,000.

The rise in claims is a sign that private employers may be ramping up layoffs, which declined as recently as June.

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