By Bob Willis
Oct. 30 (Bloomberg) -- The number of Americans filing first- time claims for unemployment benefits was unchanged last week and the total number of recipients hovered close to a five-year high, signs the labor market is deteriorating.
Initial jobless claims held at 479,000 in the week that ended Oct. 25, the Labor Department said today in Washington. The number of people staying on benefit rolls fell by 12,000 to 3.715 million in the week ended Oct. 18.
The biggest U.S. housing recession in a generation, exacerbated by a deepening credit crisis, has led to about three- quarters of a million job losses this year, undermining consumer spending and pushing the economy toward a downturn. The government may report next week that the economy lost jobs in October for a 10th consecutive month.
``The weakness in the economy is the main factor boosting joblessness,'' Steven Wood, president of Insight Economics LLC in Danville, California, said before the report. ``The labor market is clearly in recession. Hiring is quite weak.''
Another government report showed the U.S. economy shrank in the third quarter by the most since the 2001 recession as the record two-decade expansion in consumer spending came to an end.
GDP Contracts
Gross domestic product contracted at a less-than-forecast 0.3 percent annual pace from July to September, according to a Commerce Department report today in Washington. The figure, the last major piece of economic data before the presidential election, follows a 2.8 percent growth rate the prior quarter.
Stock-index futures, which were up earlier in the day, remained higher after the reports. Futures on the Standard & Poor's 500 Stock Index rose 3.5 percent to 959.20 at 8:39 a.m. in New York. Benchmark 10-year Treasury note yields rose to 3.94 percent from 3.86 percent late yesterday.
Initial claims were estimated to fall to 475,000 from 478,000 initially reported for the prior week, according to the median projection of 41 economists in a Bloomberg News survey. Estimates ranged from 460,000 to 485,000.
The four-week moving average of initial claims, a less volatile measure, dropped to 475,500 from 480,500, today's report showed. So far this year, weekly claims have averaged 393,800, compared with an average 321,000 for all of 2007.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, was unchanged at 2.8 percent. These data are reported with a one-week lag.
Forty states and territories reported a decrease in new claims, while 13 reported an increase.
Payrolls Report
Initial jobless claims reflect weekly firings and tend to rise as job growth -- measured by the monthly non-farm payrolls report -- slows.
The economy probably lost 175,000 jobs in October, the most this year, according to economists surveyed by Bloomberg before the Labor Department report set for Nov. 7. That would add to nine months of job losses and bring total losses this year to 935,000.
Carmakers and financial-service companies have led the wave of firings.
Chrysler LLC, the third-largest U.S. automaker, will eliminate 25 percent of its salaried workforce, or about 4,300 jobs, starting next month as part of efforts to trim costs as sales slump.
`Unimaginable Times'
``These are truly unimaginable times for our industry,'' Chief Executive Officer Robert Nardelli said in a statement on Oct. 24. He said ``additional organizational and restructuring announcements'' are planned ``in the near future,'' without giving details.
Goldman Sachs Group Inc., the only firm among Wall Street's five biggest to remain profitable throughout the credit crisis, will shed about 3,200 workers, or 10 percent of staff, as the revenue outlook worsens, said a person briefed on the plan last week who declined to be identified.
The cuts add to more than 130,000 jobs eliminated in the financial industry since mid-2007, eclipsing the 83,000 lost after the Internet bubble burst in 2001.
To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net
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