The number of US workers drawing state unemployment benefits hit another record high early this month and factory activity in the Mid-Atlantic region shrank again as the economy battles a severe downturn. The Labour Department said on Thursday that 5.47 million people stayed on the benefit rolls in the week ended March 7, up from 5.29 million the previous week and the highest on record.
-- Initial claims for aid ebbed last week, but still high
-- Factory activity in the US Mid-Atlantic shrinks again
With the economy mired in recession since December 2007, the nations unemployment rate has skyrocketed and the claims figures underscore the difficulty of finding a new job. The insured unemployment rate, the percentage of insured workers receiving jobless benefits, jumped to 4.1 percent in the March 7 week, the highest since June 1983, from 3.9 percent the week before.
"There is no sign of even a temporary easing in the downward pressure on employment," said Ian Shepherdson, chief US economist at HFE in Valhalla, New York, who said the economy would likely lose more than 700,000 jobs this month. The data had little impact on financial markets, which were still focusing on the Federal Reserves decision on Wednesday to buy up to $300 billion of longer-dated government debt.
The Feds latest steps are intended to lower interest rates to encourage lending and stimulate spending in a bid to break the nations deep recession, which is now in its 15th month. The severe downturn is squeezing companies profit margins, forcing them to cut jobs, exacerbating the burden of households already staggering from a rapid decline in wealth. Over 4 million jobs have been lost since the recession began and the jobless rate has already hit 8.1 percent, the highest level in 25 years.
While the overall size of the benefit rolls hit a record early this month, the number of people filing new claims for jobless benefits ebbed to 646,000 last week from 658,000 the previous week.
However, the four-week moving average for new claims, considered to be a better gauge of underlying trends, rose to 654,750 last week, the highest since October 1982. "The current level of initial claims is incredibly high and still signals an extremely weak labour market," said Omair Sharif, a strategist at RBS Greenwich Capital in Greenwich, Connecticut.
The Philadelphia Federal Reserve Bank said its business activity index suggested manufacturing activity in the Mid-Atlantic region was declining at a slower pace this month than in February.
The Philly Feds index came in at minus 35.0 for March from minus 41.3 a month earlier, but an employment gauge slumped to its lowest since the surveys launch in 1968, and new orders dropped to their lowest level in almost 29 years. Still, economists were encouraged that the pace of contraction in business activity was not as severe as before.
"Its not surprising, given the pace of decline we saw in that quarter. So were not seeing a recovery in the manufacturing sector yet, but we are seeing a degree of stabilisation," said Michael Woolfolk, senior currency strategist at the Bank of New York-Mellon in New York. In another report indicating that the economic downturn has yet to find a bottom, the Conference Boards Index of Leading Economic Indicators fell 0.4 percent in February after gaining 0.1 percent in January.