Jobless claims show U.S. labor market struggling

Reuters News
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Posted: Jun 21, 2012 8:35 AM
Jobless claims show U.S. labor market struggling
By Lucia MutikaniWASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits was little changed last week, according to government data on Thursday that suggested the labor market was struggling to regain momentum.Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 387,000, the Labor Department said. The prior week's figure was revised up to 389,000 from the previously reported 386,000.Economists polled by Reuters had forecast claims falling to 380,000 last week. The four-week moving average for new claims, considered a better measure of labor market trends, increased 3,500 to 386,250 - the highest level since early December.The claims data covered the survey week for June's nonfarm payrolls and the report pointed to little or no improvement on the paltry 69,000 jobs added in May. Claims rose 15,000 between the May and June survey periods."This confirms the weak labor market we have. I suspect we would see a modest rebound in payrolls in June but it would still be below 150,000. It's going to be another month of sub-par jobs data," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.U.S. stock index futures were little changed on the data, while Treasury debt prices slightly trimmed earlier gains. The euro pared losses versus the dollar.Labor market weakness prompted the Federal Reserve on Wednesday to ease monetary policy further by extending a program to re-weight bonds it already holds toward longer maturities to hold down borrowing costs.The so-called Operation Twist, which was due to expire this month and will now run through the end of the year, was expanded by $267 billion.Fed Chairman Ben Bernanke said the U.S. central bank had considerable scope to take further action and that a lack of sustained progress in the labor market would require it.Much of the recent weakness in the labor market has been due to a decline in hiring, rather than increased layoffs.Data on Tuesday showed job openings dropped to a five-month low in April, spread across all sectors of the economy. There are no jobs for more than two out of every three unemployed Americans.New applications for unemployment benefits have barely budged since April. A Labor Department official said there was nothing unusual in the state-level data and only claims for New Jersey had been estimated.The number of people still receiving benefits under regular state programs after an initial week of aid was unchanged at 3.30 million in the week ended June 9.The number of people on extended benefits fell 24,638 to 110,864 in the week ended June 2, the latest week for which data is available, as more states lost eligibility for extended benefits for the long-term unemployed.Only six states and the District of Columbia were offering extended benefits during that period.Economists expect that as more people fall off the unemployment benefit rolls, that will push down the jobless rate as they are forced to take up jobs they would not normally have considered or drop out of the labor force.A total of 5.83 million people were claiming unemployment benefits during the week ending June 2 under all programs, down 1,164 from the previous week.(Editing by Andrea Ricci)