RTTNews - The number of people filing first-time unemployment claims dipped last week, easing fears that there had been a broad-based resurgence in layoffs.
Still, the government's unemployment rolls continue to swell, reaching another record high in the latest data. With auto industry cut backs contributing to the weak jobs market, the evidence points to continued increases in unemployment for th near future.
The U.S. Labor Department revealed that initial jobless claims came in at 631,000 for the week ended May 16th. This was down 12,000 from the previous week's revised total of 643,000.
The 4-week moving average for initial claims, a statistic that flattens out week-to-week volatility in the data, slipped to 628,500. There has been a decline in the 4-week moving average in five out of the last six weeks, indicating a downward trend in layoffs.
After hitting its cycle high of 674,000 in late March, jobless claims began to drift steadily lower through April and into early May. The figure got down to around 600,000 before rebounding in the week of May 9th - raising fear that companies have not finished their layoffs yet.
The number of people receiving ongoing unemployment help, a figure known as continuing claims, rose again in the latest statistics. Continuing claims climbed to 6.662 million - yet another record high.
Continuing claims has risen each week since early January, setting a series of record highs. Even as layoffs have moderated somewhat, hiring remains very sluggish, making it difficult for the unemployed to find new jobs.
Though the improvement in jobless claims has tempered lately, some have blamed problems in the auto industry, where Chrysler has closed plants and GM has temporarily shut down some capacity.
Still, the hope that job losses were beginning to ebb has been dampened lately, with many now holding that dreams of a near-term recovery have been pre-mature.
On Wednesday, the Federal Reserve lowered its economic outlook. Minutes of the April meeting of the central bank's policy-setting committee showed that the Fed's staff now sees an unemployment rate between 9.2 and 9.6 percent.
Previously, the Fed had predicted 8.5 to 8.8 percent, but that prediction was rendered moot when the jobless rate came in at 8.9 percent in April.
Central bank economists also dampened their forecast for the overall economy. The projection now calls for a drop in GDP of 1.3 to 2.0 percent for 2009 - down from its prior forecast of a decline of 0.5 to 1.3 percent.
Meanwhile, the Obama administration has also looked to moderate expectations of a recovery. Treasury Secretary Timothy Geithner told a group of lawmakers Wednesday that the outlook has improved lately, but that it will take time for a full recovery.
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