Washington: The number of US workers drawing state unemployment benefits hit another record high early this month and factory activity in the Mid-Atlantic region shrank again as the economy battles a severe downturn.
The US Labor Department said on Thursday that 5.47 million people stayed on the benefit rolls in the week ended 7 March, up from 5.29 million the previous week and the highest on record.
Jobless rolls are swelling to record levels after Congress last year extended benefits beyond the regular 26 weeks.
With the economy mired in recession since December 2007, the nation’s unemployment rate has skyrocketed and the claims figures underscore the difficulty of finding a new job.
The insured unemployment rate, the percentage of insured workers receiving jobless benefits, jumped to 4.1% in the 7 March week, the highest since June 1983, from 3.9% the week before.
“There is no sign of even a temporary easing in the downward pressure on employment,” said Ian Shepherdson, chief US economist at HFE in Valhalla, New York, who said the economy would likely lose more than 700,000 jobs this month.
The data had little impact on financial markets, which were still focusing on the Federal Reserve’s decision on Wednesday to buy up to $300 billion of longer-dated government debt.
The US dollar plunged for a second straight session, while US stocks fell on worries that the Fed’s efforts to help the economy were too costly and untested. The Dow Jones industrial average fell 85.78 points, or 1.15%, to 7,400.80. The S&P 500 shed 1.3%. The Nasdaq lost 0.5%.
Government bond prices dropped as investors booked profits after Wednesday’s massive rally in the wake of the Fed’s announcement.
The Fed’s latest steps are intended to lower interest rates to encourage lending and stimulate spending in a bid to break the nation’s deep recession, which is now in its 15th month.
The severe downturn is squeezing companies’ profit margins, forcing them to cut jobs, exacerbating the burden of households already staggering from a rapid decline in wealth.
Over 4 million jobs have been lost since the recession began and the jobless rate has already hit a 25-year high of 8.17.
The number of people filing new claims for jobless benefits ebbed to 646,000 last week from 658,000 the previous week.
However, the four-week moving average for new claims, considered to be a better gauge of underlying trends, rose to 654,750 last week, the highest since October 1982.
“Clearly the trend is still up and the very high level of claimants around 650,000 is a pretty good sign that we are going to have another huge loss in March payrolls and the market is still extremely weak,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh.
The Philadelphia Federal Reserve Bank said its business activity index suggested manufacturing activity in the Mid-Atlantic region was declining at a slower pace this month than in February.
The Philly Fed’s index came in at minus 35.0 for March from minus 41.3 a month earlier, but an employment gauge slumped to its lowest since the survey’s launch in 1968, and new orders dropped to their lowest level in almost 29 years.
“I cannot draw comfort from that (headline figure). A lot of components underneath were weaker. Even if it’s in the 30 rather than in the 40s, that kind of a negative sign is still a very weak sign for manufacturing activity,” said Hoffman.
In another report indicating that the economic downturn has yet to find a bottom, the Conference Board’s Index of Leading Economic Indicators fell 0.4% in February after gaining 0.1% in January.
“The credit market freeze is relenting very slowly. The LEI suggests the recession will continue in the near term,” said Ken Goldstein, an economist for the Conference Board, a private research group based in New York. “A return to strong growth will not likely occur until 2010.”