New jobless claims fell more than expected last week, but continuing claims set a new record for the eighth straight week and few economists expect the labor market to improve anytime soon.
The Labor Department said Thursday that initial requests for unemployment insurance dropped to a seasonally adjusted 646,000 from the previous week’s revised figure of 658,000. That was better than analysts’ expectations.
But continuing claims jumped 185,000 to a seasonally adjusted 5.47 million, another record-high and more than the roughly 5.33 million that economists expected.
The four-week average of claims rose to 654,750, the highest since October 1982, when the economy was emerging from a steep recession, though the labor force has grown by about half since then.
Economists said the signs of life that have cropped up in other areas of the economy in the past week, such as upticks in retail sales and housing starts, aren’t yet apparent in the labor market.
“There is no sign of even a temporary easing in the downward pressure on employment,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a client note.
Initial claims have topped 600,000 for seven straight weeks, a level that many economists say is consistent with another huge drop in net payrolls when the Labor Department issues its monthly employment report next month.
Net job losses could top 700,000 in March, Shepherdson said, which would bring total losses to above 5 million jobs since the recession began in December 2007.
Meanwhile, a private sector group’s index of leading economic indicators dropped less than expected in February, but continued its broad decline of the past 19 months. The Conference Board’s monthly forecast of economic activity fell 0.4 percent last month, but economists surveyed by Thomson Reuters expected a 0.6 percent decline.
The index is designed to forecast economic activity in the next three to six months, based on 10 components that include stock prices, money supply, jobless claims and building permits.
More job cuts were announced Thursday when FedEx Corp. said it’s planning an undisclosed number of layoffs as the company reported its fiscal third-quarter profit dropped 75 percent amid severe weakness in the global economy. The Memphis, Tenn.-based company, often seen as a bellwether for the U.S. economy, also plans to scale back some workers’ hours and wages.
The job market has been hammered as employers, squeezed by reductions in consumer and business spending, cut their work forces. The unemployment rate reached 8.1 percent last month, the highest in more than 25 years. Many economists expect the rate could reach 10 percent by the end of this year.
On Wall Street, where the market has advanced six of the past seven sessions, stocks rose slightly. The Dow Jones industrial average added about 2 points in morning trading, and broader indicators also edged up.
The Federal Reserve said Wednesday it will pump $1.2 trillion into the economy in an effort to lower rates on mortgages and other consumer debt and loosen credit. To do so, the Fed will spend up to $300 billion to buy long-term government bonds and an additional $750 billion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.
As a proportion of the work force, the number of Americans on the jobless benefit rolls is the highest since June 1983. The 5.47 million continuing claims also were up substantially from a year ago, when only about 2.85 million people were continuing to receive unemployment checks.
The increase in continuing claims is an indication that many newly laid-off workers are having difficulty finding jobs.
And even that number is deceptively low: an additional 1.5 million people were receiving benefits under an extended unemployment compensation program approved by Congress last year. That tally was as of Feb. 28, the latest data available.
Among the states, Indiana reported the biggest increase in new claims for the week ending March 7 with a jump of more than 5,500, which it attributed to layoffs in the auto and manufacturing industries. The next largest increases were in Pennsylvania, Texas, Florida and Michigan.
The biggest drop was in New York, which had 11,218 fewer claims as a result of fewer layoffs in the service and transportation industries. Connecticut, Tennessee, California and Oregon had the next largest declines.
More job losses were announced this week. Caterpillar Inc. Tuesday said it would lay off 2,400 workers as global demand for its mining and construction machines slumps. Mobile device maker Nokia Corp. said it would cut 1,700 jobs worldwide, and oil producer Baker Hughes Inc. said it would eliminate 1,500 jobs, bringing its total recent cuts to 3,000.