Unemployment applications decrease
Friday, August 5, 2011
WASHINGTON (AP) — The number of people seeking unemployment benefits dipped last week, a sign the job market may be improving slowly.
Weekly applications for unemployment benefits edged down 1,000 to a seasonally adjusted 400,000, the Labor Department said Thursday. That’s the lowest level in four months. The previous week’s figure was revised upward from 398,000 to 401,000.
The four-week average, a less volatile figure, dropped for the fifth straight week to 407,750. That suggests there is a downward trend in layoffs.
Applications “have been grinding lower, and this week’s result is at least not bad news, which at this point feels pretty good,” said Robert Kavcic, an economist at BMO Capital markets, in an email.
Stocks fell sharply in morning trading as investors continued to worry about the struggling economies in Europe and slow growth in the U.S. The Dow Jones industrial average dropped more than 208 points. Broader indexes also fell.
Unemployment benefit applications have been at or above 400,000 for 17 weeks. They fell in February to 375,000, a level that signals healthy job growth. They stayed below 400,000 for two months. But applications then surged to an eight-month high of 478,000 in April and have declined slowly since then.
A key question is whether applications can keep declining. Companies announced more layoffs in July, according to outplacement firm Challenger, Gray & Christmas, pushing planned job cuts to a 16-month high. That could mean benefit applications will climb in coming months.
The report comes a day before the government will release the July employment figures. Economists forecast that Friday’s report will show that employers added a net total of 90,000 jobs. The unemployment rate is expected to remain unchanged at 9.2 percent.
That would be an improvement from June, when the economy added just 18,000 — the fewest in nine months. But at least three times as many new jobs are needed to substantially reduce the unemployment rate.
Many large companies have cut jobs in recent weeks. Pharmaceutical giant Merck & Co. said last week that it will eliminate 13,000 positions worldwide by 2015, about a third of them in the U.S.
Cisco Systems Inc., the world’s largest maker of computer-networking gear, last month said it is eliminating 6,500 positions, or about 9 percent of its worldwide work force of 73,000. And Lockheed Martin said in June that it will cut 2,700 jobs.
Employers are pulling back as the economy struggles.