Jobs report paints bleaker picture of economy

WASHINGTON - The economy is looking bleaker as new applications for jobless benefits rose last week to the highest level in almost six months, the Labor Department reported Thursday, signaling that hiring remains weak and employers may be going back to cutting their staffs.

First-time claims for jobless benefits edged up by 2,000 to a seasonally adjusted 484,000, the government said. That's the highest total since February. Analysts had expected claims to fall.

"Businesses are simply reluctant to put people on payrolls and are more willing to let them go," David Resler, chief economist at Nomura Securities International in Manhattan, told Bloomberg News. "This week's increase was more disappointing than what we've seen in recent weeks."

Analysts say the increase suggests companies won't be adding enough workers in August to lower the 9.5 percent unemployment rate.

Initial claims have risen in three of the past four weeks and are close to their high point for the year, 490,000, reached in late January. The four-week average, which smooths volatility, soared by 14,250, to 473,500, also the highest since late February.

Data have been decidedly weak over the past couple of months, with private-sector job growth lagging expectations and the national unemployment rate stuck at 9.5 percent.

That has fed concerns the economy could be at risk of a renewed recession or face a debilitating bout of deflation as the bleak jobs market pressures incomes and prices.

"Whatever recovery we have seen is an outgrowth of inventory restocking and government largesse, and neither one is sustainable," Bob Andres, chief investment strategist at Merion Wealth Partners in Berwyn, Pa., told Reuters.

Economists closely watch weekly claims as a gauge of the pace of layoffs and an indication of employers' willingness to hire.

The July jobs report last Friday showed that the economy lost a net total of 131,000 jobs last month.

Excluding the impact of the elimination of 143,000 temporary census jobs, the economy added a meager 12,000 positions, as layoffs by state and local governments almost canceled out weak hiring by businesses.

Claims fell steadily last year from their peak of 651,000, reached in March 2009. But they have mostly leveled out this year at or above 450,000.

With Reuters

Statistics on Long Island joblessness

Jobless rate: 6.7 percent as of June, unchanged from May and down from the recession's peak of 7.9 percent in February.

Job growth: The Island had 5,400 more jobs in June 2010 than it did in June 2009, the third straight month of job growth.

Source: New York State Labor Department