U.S. Initial Jobless Claims Fall to 445,000 Last Week

By Bob Willis

Sept. 11 (Bloomberg) -- More Americans than forecast filed initial claims for unemployment insurance last week, while total benefit rolls rose to the highest level in almost five years, as companies cut staff to maintain profits in a slowing economy.

First-time jobless claims fell to 445,000 in the week ended Sept. 6 from a revised 451,000 the prior week that was more than initially reported. The number of people staying on rolls rose 122,000 to 3.525 million, the highest since October 2003.

The labor market is weakening as the biggest housing recession in a generation spills over to the broader economy, slowing demand and causing a surge in financial losses. Economists surveyed by Bloomberg News this month forecast consumer spending in the current quarter slowed to the weakest pace since 1992.

``The upward trend in initial jobless claims paints a bleak picture of the labor market,'' Ryan Sweet, a senior economist at Moody's Economy.com in West Chester, Pennsylvania, said before the report. ``Rising joblessness will hurt spending further and threatens to magnify the troubles in financial and housing markets.''

Treasuries, which had risen earlier in the day, stayed higher. Benchmark 10-year note yields were at 3.58 percent at 8:39 a.m. in New York, from 3.63 percent late yesterday. Futures on the Standard & Poor's 500 Stock Index dropped 1.5 percent to 1,214.70.

Economists' Forecasts

Economists had forecast claims would fall to 440,000 from a previously reported 444,000 in the prior week, according to the median projection in a Bloomberg News survey. Estimates ranged from 400,000 to 460,000.

The four-week moving average of initial claims, a less volatile measure than the weekly figure, rose to 440,000 from 439,750, today's report showed.

So far this year, weekly claims have averaged 380,000, compared with 321,000 for all of 2007, when the economy generated 91,000 new jobs each month on average. Monthly job losses have averaged 77,000 this year, according to Labor data. Monthly payrolls tend to fall as claims rise.

The surge in claims that began in the middle of July can be at least partly attributed to the government's extension of jobless benefits under legislation signed by President George W. Bush in June. The government hasn't been able to quantify the program's impact on initial claims.

``There is some uncertainly built into those weekly jobless numbers because of the extension of jobless benefits,'' said Ellen Zentner, U.S. macroeconomist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.

Insured Unemployment Rate

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 2.6 percent from 2.5 percent. Twenty-eight state and territories reported an increase in claims, while 25 had a decrease. These data are reported with a one-week lag.

The government last week reported the economy lost 84,000 jobs in August, and the jobless rate jumped to 6.1 percent, matching a high reached in September 2003. Job losses in the first eight months of the year have totaled 605,000.

Consumers, feeling less secure in their jobs and battling gasoline prices that topped $4 a gallon two months ago, are pulling back on the spending that makes up two thirds of the economy. Consumer spending in the July-to-September period may be flat, the weakest since 1992, according to economists surveyed by Bloomberg last week.

Auto Slump

Automakers and banks have been leading recent cutbacks in employment, and the weakness is spreading to other manufacturing and service companies.

Lehman Brothers Holdings Inc., which this week reported a $3.9 billion third-quarter loss, was poised to eliminate as many as 1,000 jobs, or about 4 percent of its workforce, in the fourth round of cuts at the fourth-biggest U.S. securities firm this year, people familiar with the matter said in late August.

New York Times Co., the third-largest U.S. newspaper publisher, will close its distribution operation in the New York metropolitan area and cut 550 jobs, or about 5.4 percent of its total staff, the company said Sept. 8. New York Times is firing workers as it copes with record industry declines in print advertising.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net