By Bob Willis
Sept. 3 (Bloomberg) -- More Americans than anticipated filed jobless-benefit claims last week, indicating companies remain focused on cutting expenses as the economy emerges from its worst recession since the 1930s.
Applications fell by 4,000 to 570,000 in the week ended Aug. 29, exceeding the 564,000 median forecast of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The total number of people collecting unemployment insurance climbed.
The firings are one reason economists project consumer spending, which accounts for 70 percent of the economy, will be slow to strengthen. Analysts surveyed by Bloomberg forecast a Labor Department report tomorrow will show August payrolls fell by 230,000, the smallest decrease in a year.
“We’re not making much progress in terms of the layoff picture,” said Jonathan Basile, an economist at Credit Suisse Holdings USA Inc., which correctly forecast the first-time filings figure. “These levels of initial claims are still consistent with declines in payrolls.”
Service industries, which account for almost 90 percent of the economy, shrank at a slower pace in August, the Tempe, Arizona-based Institute for Supply Management also reported today. The group’s index of non-manufacturing businesses rose to 48.4, exceeding forecasts and the highest level in 11 months, from 46.4 in July.
Markets
Stocks trimmed gains following the services data as optimism dimmed over the pace of the economic recovery. The Standard & Poor’s 500 Index was little changed at 994.76 at 10:33 a.m. in New York. Stock futures were boosted earlier in the day by the biggest rally in Chinese shares in six months. Treasuries trimmed losses, with benchmark 10-year notes yielding 3.33 percent, up from 3.31 percent late yesterday.
The median claims forecast reflected estimates from 40 economists surveyed. Projections ranged from 550,000 to 580,000. The Labor Department revised the prior week’s applications level up to 574,000 from a previous estimate of 570,000.
The jobless claims report showed the four-week moving average of initial applications, a less volatile measure, climbed to 571,250 last week, the highest level in more than a month, from 567,250.
Continuing Claims
Continuing claims jumped by 92,000 in the week ended Aug. 22 to 6.23 million. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 4.7 percent in the week ended Aug. 22 from 4.6 percent the prior week.
Thirty-two states and territories reported a decrease in claims, while 21 showed an increase. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to rise as job growth -- measured by the monthly non-farm payrolls report -- slows.
The economy has lost 6.7 million jobs since the recession started in December 2007, the most of any downturn since the Great Depression. Even so, the 247,000 drop in payrolls reported for July was lower than economists projected.
Manufacturers are still cutting staff. Whirlpool Corp., the world’s largest appliance maker, will close its Evansville, Indiana, manufacturing plant, resulting in the elimination of 1,100 jobs as the housing slowdown hurts demand.
Job Cuts
The job cuts, which represent about 1.6 percent of Whirlpool’s workforce, will occur in 2010, the Benton Harbor, Michigan-based company said Aug. 28 in a statement.
Lockheed Martin Corp., the world’s largest defense company, plans to cut about 800 jobs at its Space Systems unit by yearend, the company said in a statement on Aug. 17.
Carmakers are among companies boosting production after a jump in sales following the government’s incentive program helped clear out inventories.
General Motors Co. called back 1,350 union workers, its biggest one-time increase in jobs since 2006, partly in response to demand from the government’s “cash for clunkers” program.
“We are adding production to almost all of our operations in the United States,” Tim Lee, GM group vice president overseeing global manufacturing and labor, said during a conference call on Aug. 18.
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