New jobless claims rise in sputtering economy

Bloomberg News Service

WASHINGTON — The number of U.S. workers filing new claims for state unemployment benefits rose last week and more companies announced job-cut plans in June as the labor market continues to deteriorate.

"The biggest threat to the economy are the layoffs and the effect that has on consumer income and consumer psychology," said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh.

Initial jobless claims rose by 7,000 to 399,000 in the week that ended Saturday, the Labor Department said. The number of people collecting unemployment benefits rose to 3.027 million during the week ended June 23, the most since November 1992.

Minnesota Mining & Manufacturing Co. said Monday that it's proceeding with a plan announced in April to eliminate 5,000 positions, underscoring how cuts announced months ago continue to weigh on the economy. It's also becoming difficult for fired workers to find new jobs as companies such as FedEx Corp., the largest over-fight-delivery service, impose hiring freezes.

Businesses announced plans last month to eliminate 124,852 jobs, a 56 percent increase from May, according to the employment firm Challenger, Gray & Christmas. The number of job cuts planned in the first six months of the year is 3 1/2 times more than the same period last year as companies trim workforces to help sagging profits.

The statistics came one day before the government's monthly employment report, which is expected today to show the jobless rate increased to 4.6 percent in June, the highest in more than three years, and the economy lost jobs for a third straight month. The last time the economy lost jobs for three straight months was 1991, a recession year.