Jobless claims surge to 626,000, highest since 1982
ECONOMIC REPORT
Jobless claims surge to 626,000, highest since 1982
By Greg Robb, MarketWatch
Last update: 10:34 a.m. EST Feb. 5, 2009
Comments: 326
WASHINGTON (MarketWatch) -- The number of new claims for state unemployment benefits surged to their highest level since 1982, according to official data released Thursday, a sign that the U.S. labor market is deteriorating at a rapid rate.
Initial jobless claims rose 35,000 to a seasonally adjusted 626,000 in the week ended Jan. 31, the Labor Department reported. This put the number at the highest level in 26 years.
Meanwhile, the four-week average of new claims rose by 39,000 to 582,250. The four-week average draws the attention of economists and investors because it smoothes out distortions caused by bad weather, strikes or the timing of holidays. It is now at the highest level since Dec. 4, 1982.
Continuing jobless claims rose by 20,000 in the week ended Jan. 24 to a seasonally adjusted 4.79 million, the most since the government's records began in 1967.
The January employment report will be released on Friday, with economists currently expecting a loss of at least 500,000 for what would be the third consecutive month. See full story.
"Friday's job numbers are likely to again be very bad and the markets are girding for that, especially with jobless claims continuing to hit levels not seen since the steep back-to-back recessions in the early 1980s," wrote Joel Naroff, president of Naroff Economic Advisers, in a note to clients.
In December, 524,000 nonfarm payroll jobs were lost, capping the worst year for U.S. job losses since 1945.
Anecdotal evidence also points to higher joblessness. Over the past month, major companies have been announcing layoffs, totaling more than 100,000 just this week alone. Those layoffs will actually take several months to play out.
Ian Shepherdson, chief economist for High Frequency Economics, said he expects net job losses of about 3 million through the first half of this year.
Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new employment. The claims data show that businesses are laying off workers at a rapid pace and that finding a replacement job is proving ever harder for those who've lost work.
Anecdotal evidence also points to higher joblessness. Major companies have been announcing layoffs, totaling more than 100,000 just this week alone. Those layoffs will actually take several months to play out.
The insured unemployment rate, representing the proportion of covered workers who are receiving benefits, remained steady at 3.6%, a 25-year high.
Typically, unemployment benefits run out after 26 weeks for those who are eligible. A total of 1.72 million people were collecting benefits under a federal program that extends unemployment benefits for an extra 13 weeks. The stimulus bill winding through Congress would extend that program further.
Benefits are generally available for those who lose their full-time job through no fault of their own. Those who exhaust their unemployment benefits are still counted as unemployed if they are actively looking for work.
In a separate report, the government said productivity rose 3.2% in the fourth quarter as hours worked declined at a faster pace than output.
"The mad dash to cut workers is paying off as firms are doing more with their remaining employees and are keeping expenses down," Naroff said.
Greg Robb is a senior reporter for MarketWatch in Washington.
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