US jobless claims show sharp drop
By Christopher S. Rugaber |
July 16, 2010, Friday
|
Print Edition
Print Edition
NEW applications for unemployment benefits fell sharply in the United States last week while manufacturing activity cooled in June and wholesale prices dipped, offering mixed signals on the economic recovery.
The Labor Department said yesterday that new claims dropped by 29,000 to 429,000, the lowest level since August 2008. But much of that was the result of seasonal factors. General Motors and other manufacturers skipped usual summer shutdowns.
It was the second straight week that initial claims dropped sharply and the third drop in the last four weeks. Claims fell by 17,000 in the previous week.
Separately, the Labor Department said wholesale prices fell for a third consecutive month, pulled down by another drop in energy costs and the biggest plunge in food costs in eight years. But excluding those two volatile commodities, inflation was relatively flat.
And the Federal Reserve said industrial production rose 0.1 percent in June, the fourth straight monthly gain. But manufacturing activity - the largest component of production - fell 0.4 percent after rising for three months.
Normally, such a sharp drop in jobless claims would be seen as a positive sign that the job market is improving. But economists will need to see the downward trend continue for several more weeks before drawing conclusions.
Another concern is that the latest drop may be the result of temporary seasonal factors.
A Labor Department analyst said manufacturing companies reported fewer temporary layoffs than usual this time of the year. General Motors said last month that it would forgo its customary two-week summer factory closings, which it uses to retool plants for new car models.
That usually causes a spike in temporary layoffs and jobless claims in early July. Other manufacturers also reported fewer temporary layoffs than expected, the analyst added.
Last week's drop "is very encouraging," Jennifer Lee, an economist at BMO Capital Markets, said in a note to clients. "But it likely won't last" because much of it was due to seasonal factors.
The Labor Department said yesterday that new claims dropped by 29,000 to 429,000, the lowest level since August 2008. But much of that was the result of seasonal factors. General Motors and other manufacturers skipped usual summer shutdowns.
It was the second straight week that initial claims dropped sharply and the third drop in the last four weeks. Claims fell by 17,000 in the previous week.
Separately, the Labor Department said wholesale prices fell for a third consecutive month, pulled down by another drop in energy costs and the biggest plunge in food costs in eight years. But excluding those two volatile commodities, inflation was relatively flat.
And the Federal Reserve said industrial production rose 0.1 percent in June, the fourth straight monthly gain. But manufacturing activity - the largest component of production - fell 0.4 percent after rising for three months.
Normally, such a sharp drop in jobless claims would be seen as a positive sign that the job market is improving. But economists will need to see the downward trend continue for several more weeks before drawing conclusions.
Another concern is that the latest drop may be the result of temporary seasonal factors.
A Labor Department analyst said manufacturing companies reported fewer temporary layoffs than usual this time of the year. General Motors said last month that it would forgo its customary two-week summer factory closings, which it uses to retool plants for new car models.
That usually causes a spike in temporary layoffs and jobless claims in early July. Other manufacturers also reported fewer temporary layoffs than expected, the analyst added.
Last week's drop "is very encouraging," Jennifer Lee, an economist at BMO Capital Markets, said in a note to clients. "But it likely won't last" because much of it was due to seasonal factors.
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