U.S. Initial Jobless Claims Fell to 654,000 Last Week

By Courtney Schlisserman

April 9 (Bloomberg) -- The number of Americans filing first-time claims for unemployment insurance exceeded 600,000 for a 10th straight week and the total collecting benefits increased to a record, signs the labor market remains weak.

First-time jobless claims fell by 20,000 to 654,000 in the week ended April 4, from a revised 674,000 a week earlier that was the highest since 1982, the Labor Department said today in Washington. The number of people staying on benefit rolls rose to a record 5.84 million in the prior week.

Companies ranging from retailer Neiman Marcus Group Inc. to farm-equipment maker Deere & Co. are still trimming payrolls to cut costs as sales and profits slump. The U.S. lost more than 650,000 jobs for a record fourth straight month in March, threatening to reverse January-February gains in the spending that accounts for almost 70 percent of economic growth.

“It is not improvement or strength, but at the very least it appears things are not getting worse,” Guy LeBas, chief economist at Janney Montgomery Scott LLC in Philadelphia, said in an interview with Bloomberg Television.

Another government report showed the U.S. trade deficit in February unexpectedly narrowed to the lowest level in nine years. The gap shrank 28 percent, the biggest drop since October 1996, to $26 billion from a revised $36.2 billion in January, the Commerce Department said today in Washington. Imports dropped 5.1 percent, leading to declines in the deficits with Japan and China, and exports climbed from a two-year low.

Stock Futures Rise

Stock-index futures extended earlier gains after the report, with futures on the Standard & Poor’s 500 Index up 2.3 percent at 9:05 a.m. in New York. Treasuries were lower, driving up yields. The benchmark 10-year note yielded 2.91 percent, up 6 basis points from yesterday.

Economists projected initial claims would fall to 660,000 last week from an initially reported 669,000 the prior week, according to the median of 45 forecasts in a Bloomberg News survey. Estimates ranged from 645,000 to 700,000.

The U.S. lost 663,000 jobs last month, the Labor Department said April 3, and the unemployment rate jumped to 8.5 percent, the highest level since 1983.

Today’s report showed the four-week moving average of initial claims, a less volatile measure, fell to 657,250 from 658,000.

Jobless Rate

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, increased to a 26-year high of 4.4 percent in the week ended March 28, from 4.3 percent a week earlier. These data are reported with a one-week lag.

Initial claims reflect weekly firings and tend to rise as job growth slows.

Twenty-four states and territories reported an increase in new claims for the week ended March 28, while 29 reported a decrease.

The recession that started in December 2007 has already cost about 5.1 million Americans their jobs, making it the biggest employment slump of the postwar era.

Deere, the world’s largest manufacturer of agricultural equipment, said yesterday it is laying off indefinitely 160 workers at its plant in Des Moines, Iowa, because of declining demand for planting and harvesting machines. The company furloughed 325 workers at two other factories last month after the global recession reduced demand for heavy machinery.

21% Cut

Olympic Steel Inc., a processor and distributor of industrial metal, said April 6 it has reduced its workforce by 21 percent from “peak” 2008 levels and cut wages by as much as 10 percent as demand for steel declines.

The economy contracted at a 6.3 percent pace in the fourth quarter, the worst performance since 1982, and should the recession continue through the end of April it would be the longest in seven decades.

The $787-billion stimulus plan that President Barack Obama signed into law in February included tax cuts and spending on infrastructure projects that Obama has said will save or create 3.5 million jobs. Restoring the economy is his “No. 1 task,” Obama said April 3 at a town-hall meeting in Strasbourg, France.

Reports for January and February indicated consumer spending had started to stabilize and companies were able to reduce inventories. Personal spending rose 0.2 percent in February and 1 percent in January, the Commerce Department said March 27.

Even so, retailer Neiman Marcus on April 7 said it fired 130 workers. The company has eliminated 955 positions so far this year including those announced this week, Ginger Reeder, a spokeswoman, said in an interview. The company in February reported a 23 percent drop in fiscal second-quarter sales at stores open at least a year.

To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net