Files for Unemployment Insurance Grow Amid Economic Slowdown

July 18, 2008

The number of newly laid-off people signing up for jobless benefits in the U.S. rose last week as companies keep work forces lean given the economy’s slowdown.

The Labor Department reported new applications filed for unemployment insurance increased by a seasonally adjusted 18,000 to 366,000 for the week ending July 12. That left new claims at their highest level since late June, when they spiked to 404,000.

The number of new layoff filings was lower than the 380,000 that economists were forecasting. Yet, the filings are higher than a year ago, when they stood at 309,000, underscoring weakness in employment conditions.

Meanwhile, the four-week moving average of claims, which smooths out week-to-week fluctuations, dipped last week to 376,500. A year ago, this figure was 312,500.

The number of people continuing to draw unemployment benefits fell to 3.1 million for the week ending July 5, compared with 2.6 million a year ago.

Several companies that announced job cuts in July include: Tribune Co.; American Airlines; IndyMac Bancorp Inc.; Cardinal Health Inc.; and Pfizer.

Cautious employers have cut jobs for six months straight bringing total job losses to 438,000 so far this year, the government reported earlier this month.

The jobless rate held steady in June at 5.5 percent after jumping in May by the most in two decades. The unemployment rate is expected to climb to 6 percent or higher by early next year.

Federal Reserve Chairman Ben Bernanke, in back-to-back appearances in Congress this week, told lawmakers that the economy is facing numerous difficulties, including rising joblessness and fallout from the housing and credit crises. High energy prices also add to the economy’s woes.

All those forces are making companies hunker down when it comes to hiring and in making new capital investments.

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