U.S. Initial Jobless Claims Fell to 614,000 Last Week

By Bob Willis

July 2 (Bloomberg) -- The number of Americans filing claims for unemployment benefits last week fell in line with forecasts, indicating firings remain elevated.

Initial jobless claims dropped by 16,000 to 614,000 in the week ended June 27, from a revised 630,000 the week before, the Labor Department said today in Washington. A separate report from Labor today showed the unemployment rate climbed to 9.5 percent, the highest since 1983, in June from 9.4 percent.

Companies may be approaching the staffing levels they are seeking to ride out the recession after slashing about 6.5 million jobs since the recession began in December 2007, the most of any downturn since World War II. Labor’s payroll report today showed the economy lost 467,000 jobs in June, more than expected.

“Conditions will only gradually improve over the second half of the year,” Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “Initial claims remain stubbornly high and need to fall more quickly to make us more comfortable that the moderation in monthly job losses is sustainable.”

Stock-index futures slumped and Treasuries rose as the payrolls report added to concerns that the weak labor market will prolong the recession. Contracts on the Standard & Poor’s 500 Index fell 1.2 percent to 907.8 as of 8:55 a.m. in New York. The benchmark 10-year note yielded 3.5 percent, down 4 basis points from yesterday.

Economists forecast claims would fall to 615,000, according to the median of 38 estimates in a Bloomberg News survey, from a previously reported 627,000 a week earlier.

Benefit Rolls

The number of people collecting unemployment insurance decreased by 53,000 in the prior week, to 6.7 million.

The four-week moving average of initial claims, a less volatile measure, fell to 615,250 from 618,000.

The jobless rate among people eligible for benefits slipped to 5 percent in the week ended June 20 from 5.1 percent.

Twenty-two states and territories reported an increase in new claims for the week ended June 20, while 31 had a decrease.

Economists surveyed by Bloomberg last month forecast the unemployment rate to rise to 10 percent by the end of the year, constraining any recovery in consumer spending. Still, the economists forecast the economy will grow in the second half of this year after contracting in the previous six months.

To contact the reporters on this story: Bob Willis in Washington bwillis@bloomberg.netShobhana Chandra in Washington schandra1@bloomberg.net