New jobless filings indicate layoffs may have peaked
By Carlos Torres and Siobhan Hughes
Bloomberg News Service
WASHINGTON — The number of U.S. workers filing new claims for state unemployment benefits fell more in early December than at any time in nine years, a sign the wave of layoffs after the Sept. 11 terrorism has crested.
State employment offices received 394,000 initial applications in the week that ended Dec. 8, down 86,000 from the final week of November, the Labor Department said. The new level is the lowest since the week terrorists attacked the World Trade Center and the Pentagon.
"Claims seem to be settling back to the levels they were at before Sept. 11," said Tim McGee, chief economist at Tokai Bank Ltd. in New York. "The attacks precipitated a rush of layoffs, but it looks like that's passed."
In Hawai'i, the weekly number of first-time unemployment claims statewide appears to have plateaued — although it still remains at a level nearly twice as high as before the attacks as hotels, retailers, restaurants and others cut jobs and workers' hours to cope with a dramatic downturn in tourism.
Between 2,600 and 2,700 people have been filing new unemployment claims each week recently, according to the state Department of Labor and Industrial Relations. Before the attacks, the department received about 1,400 new claims a week.
Since the attacks, 37,000 unemployment claims have been filed in Hawai'i.
Keeping the unemployment claims down nationally are near-record vehicle sales that are prompting automakers such as DaimlerChrysler AG's Chrysler unit to rehire laid-off workers in order to keep up with demand. General Motors Corp. has said it will increase production next year.
The last time initial claims fell as much was the week ended Aug. 1, 1992, when they fell by 103,000. The four-week average for new claims declined to 450,000 from 462,000. Analysts had expected claims to fall to 465,000 last week from the 475,000 originally reported for the week before.
Still, the number of workers collecting benefits rose, a sign unemployment won't fall soon.
The jobless rate increased last month to 5.7 percent, the highest in six years, and companies reduced payrolls by 331,000 people, the Labor Department reported last week. Combined job losses in the last two months were the largest in two decades.
Some companies are ready to bring back workers. Chrysler will restore an undisclosed number of jobs stamping body panels for the Jeep Wrangler and in April will start running staggered shifts at the plant that makes the Jeep Liberty. That may prompt the company to rehire as many as 300 people, said Nick Vuich, Jeep chairman for United Auto Workers Local 12, in a letter to members this month.
Zero-interest financing and other incentives helped carmakers sell 18 million vehicles at an annual rate in November, the fifth best month ever, after a record 21.3 million in October.
General Motors said last month it will boost first-quarter production 7.1 percent because it's running low on popular models.
Other companies haven't finished eliminating jobs.
Kroger, the largest U.S. grocery chain, said this week it will fire 1,500 workers in the next 12 months.
Sales of flowers, jewelry, electronics and apparel at Fred Meyer stores, which Kroger bought in May 1999, have been less than expected as consumers cut spending in the recession.
American Express, the largest U.S. travel agent, said last week that it will fire as many as 6,500 employees, with about half of those coming from its travel operations. Travel sales fell 46 percent in October and 38 percent in November compared with the year-earlier periods.
The number of people remaining on jobless rolls rose by 36,000 to 3.656 million in the week that ended Dec. 1. The prior week continuing claims fell by 367,000.
A compromise economic stimulus package, cobbled by Republicans and Democrats last week, contains provisions to help the unemployed.
Along with individual and corporate tax cuts, it extends unemployment benefits for 13 weeks for all workers and creates a new refundable tax credit toward the cost of purchasing health care.
Federal Reserve policy-makers cut the benchmark overnight bank-lending rate by a quarter percentage point on Tuesday in order to lift the U.S. out of recession.
The reduction, the 11th this year, brought the rate to a four-decade low of 1.75 percent.
The National Bureau of Economic Research has declared the United States is in a recession that started in March. In the third quarter, the economy contracted at an annual rate of 1.1 percent.
The Labor Department also said that 41 states and territories reported an increase in new claims during the week that ended Dec. 1, while 12 states and territories reported a decrease.
The insured unemployment rate, which moves up and down with the jobless rate, was unchanged at 2.8 percent in the week that ended Dec. 1. It measures the number of people receiving benefits divided by the number covered by the program.
Data on the total number of unemployed workers continuing to receive benefits and state-by-state data are reported with a one- week lag to initial claims.
