By Timothy R. Homan
March 19 (Bloomberg) -- The number of Americans collecting jobless benefits swelled to a record 5.47 million, indicating that former employees are unable to find new work as companies continue to cut costs.
The number of people staying on benefit rolls jumped by 185,000 in the week ended March 7, the Labor Department said today in Washington. Initial jobless applications last week topped 600,000 for a seventh straight time, the worst performance since 1982, while the figure was less than forecast.
Employers ranging from FedEx Corp. to Sunoco Inc. recently announced plans to trim payrolls, making it harder for the Obama administration to accomplish its goal of creating or saving 3.5 million jobs. Federal Reserve policy makers yesterday unveiled more than $1.1 trillion in additional initiatives to unclog credit and prevent the economy from sinking even more.
“We’re going to see some ugly numbers for a few more months,” Julia Coronado, a senior economist at Barclays Capital Inc. in New York, said in an interview with Bloomberg Television. The jobless claims figures for this month mean the March employment report will be “every bit as bad” as the declines in excess of 650,000 in the past three months, she said.
Treasuries Rally
Treasuries advanced further after surging yesterday following the Fed’s announcement that it will start buying U.S. government debt. Benchmark 10-year note yields fell to 2.52 percent at 9:40 a.m. in New York from 2.54 percent late yesterday and 3.01 percent two days ago. The Standard & Poor’s 500 Stock Index gained 0.7 percent to 799.81.
FedEx, the second-largest U.S. package-shipping company, said today profit dropped as air shipments decreased for a 13th consecutive quarter. The Memphis, Tennessee-based company said it would cut an unspecified number of jobs as it seeks to trim $1 billion from operating costs by next year.
First-time claims in the week ended March 14 fell by 12,000 to 646,000, lower than the 655,000 median forecast of 39 economists surveyed by Bloomberg News. Projections ranged from 635,000 to 690,000. Labor revised the prior week’s claims to 658,000 from an originally estimated 654,000.
The four-week moving average of initial claims, a less volatile measure, rose to 654,750 from 651,000.
State Tallies
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, climbed to 4.1 percent in the week ended March 7, the highest level since 1983. Twenty- eight states and territories reported an increase in new claims for that same period, led by Indiana, which saw an increase in firings at manufacturers including automakers, and Pennsylvania. Applications decreased in 25 states.
“The labor market will continue to weaken and we expect to see a slow and steady march upward of initial claims,” Maxwell Clarke, chief U.S. economist at IDEAglobal in New York, said before the report. “Accelerated pressure in continuing claims is likely to be seen from people unable to find employment amidst this sizeable contraction.”
Initial claims reflect weekly firings and tend to rise as job growth slows.
The U.S. unemployment rate reached 8.1 percent in February, the highest level in more than a quarter century, Labor said on March 6. Employers eliminated 651,000 positions, the third straight month that losses surpassed 600,000 and the first time that has happened since records began in 1939.
Economists surveyed by Bloomberg News earlier this month predicted the U.S. jobless rate will climb to 9.4 percent this year and remain elevated through at least 2011. At the same time, the country’s economy will shrink 2.5 percent in this year, the weakest performance since 1946.
The global slowdown is resulting in job cuts for U.S. businesses. Caterpillar, the world’s largest maker of construction equipment, said this week it will cut 2,365 workers at five U.S. plants as demand for construction equipment weakens. The company has said it may post its first quarterly loss in 16 years and sales may drop 22 percent for the year.
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