The mantra of American business these days is: Do more with less.
New jobless claims soared to a more than 26-year high in the latest week and a record number of Americans are receiving jobless benefits, according to government data released Thursday. Meanwhile, productivity soared at the end of last year as companies cut the number of hours worked faster than output declined, a reflection of the massive number of layoffs.
And factory orders dropped for a fifth straight month in December, closing out the weakest year since 2002.
The only bright spot was that with all the job cuts, labor costs have slowed, removing one threat of inflation.
The Labor Department reported Thursday that the number of laid-off workers seeking jobless benefits rose last week to a seasonally adjusted 626,000, from the previous week's upwardly revised figure of 591,000. The latest total is far more than analysts' expectations of 583,000.
That's also the highest since October 1982, when the economy was in a steep recession, though the work force has grown by about half since then.
The number of people that remained on the unemployment compensation rolls increased slightly to nearly 4.8 million, the most since records began in 1967.
As a proportion of the work force, the number of people receiving unemployment benefits is at the highest level since August 1982. But that doesn't include an additional 1.7 million people receiving unemployment insurance through an extension of benefits Congress approved last year, which brings the total to about 6.5 million.
The extension provides up to 33 additional weeks of benefits, on top of the 26 weeks typically provided by states.
The numbers reflect the rapid deterioration in the labor market in recent weeks as companies from a wide range of sectors have announced tens of thousands of layoffs and displaced workers find it even more difficult to land a new job.
The jobless claims data come ahead of Friday morning’s January employment report, which is expected to show U.S. employers slashed another 525,000 workers from their payrolls after cutting 524,000 jobs in December.
President Barack Obama said Thursday that Friday’s monthly jobs report is likely to be “dismal.”
“Tomorrow, we're expecting another dismal jobs report on top of the 2.6 million jobs that we lost last year,” he said during a visit to the Department of Energy.
The Labor Department said in a separate report Thursday that productivity rose at an annual rate of 3.2 percent in the final three months of last year, far above the 1.1 percent rise that economists had expected.
Unit labor costs, meanwhile, edged up at a 1.8 percent annual rate, far lower than the 2.9 percent rise that had been forecast. The results underscored how the deepening recession has removed the threat of inflation.
The Commerce Department said Thursday that orders dropped by 3.9 percent in December, an even bigger decline than the 3 percent that economists had been expecting. The weakness was widespread with a range of industries from autos to heavy machinery and computers all reporting big declines in demand.
For all of 2008, factory orders are up by 0.4 percent, the weakest showing since orders actually fell by 1.8 percent in 2002.
The layoffs continued Thursday with cosmetics maker Estee Lauder Cos. saying its fiscal second-quarter profit fell 30 percent and it plans to begin a four-year restructuring plan that will include cutting 2,000 staffers, or 6 percent of the work force. The company will also continue its hiring freeze.
On Wednesday, Botox maker Allergan Inc. and Time Warner Inc.'s cable division announced large job cuts. A day earlier, PNC Financial Services Group, airplane maker Hawker Beechcraft Corp., Liz Claiborne Inc., King Pharmaceuticals Inc. and aerospace company Rockwell Collins Inc. announced layoffs. General Motors Corp., meanwhile, said it will offer buyouts to all of its hourly workers.
The spreading layoffs are wreaking havoc across the economy. Retailers have been hit especially hard.
Many of the nation's merchants reported sharp declines in sales Thursday.
The malaise crossed the spectrum of retailing, from department chains to teen chains. Wet Seal Inc., Stage Stores Inc. and Children's Place Retail Stores Inc. were among those posting deeper-than-expected sales declines.
It wasn't all bad news, though. Wal-Mart's January sales beat Wall Street's forecasts after the chain drew shoppers focused on necessities like groceries. Macy's, which this week said it would slash 7,000 jobs, on Thursday raised its fourth-quarter and full-year forecasts after reporting its sales.
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