Associated Press
WASHINGTON — The number of Americans filing new claims for unemployment insurance rose sharply for a second straight week even as signs emerged that the worst of the recession may be over.
The Labor Department reported Thursday that for the workweek ending Dec. 29, new claims for jobless benefits jumped by a seasonally adjusted 36,000 to 447,000, the highest level since the beginning of December.
The week before, new claims rose by 26,000, according to revised figures. That was a much bigger increase than the 7,000 gain previously reported.
"The bounce likely reflects a return to more normal weather" and thus doesn’t conflict with indications that the U.S. economy is improving, said Maury Harris, chief economist with UBS Warburg. "Still, the level of claims remains too high to stabilize the unemployment rate."
Given that, many economists are forecasting a rise in the nation’s unemployment rate — now at 5.7 percent — to 5.8 percent or 5.9 percent in December. The government releases its monthly employment report Friday.
Many economists also are projecting payrolls to be down by around 150,000 to 175,000 in December, compared with a huge loss of 331,000 in November.
Economist Clifford Waldman of Waldman Associates predicted continued heavy losses of factory jobs, and didn’t predict many gains for retail jobs despite the holiday hiring season.
On Wall Street, the latest jobless claims report didn’t get investors down. The Dow Jones industrial average gained 98.74 points to close at 10,172.14.
New jobless claims tend to be volatile during the holiday season, private economists say, so they put more weight on the four-week moving average of new claims, which smoothes out week to week fluctuations.
The more-stable four-week moving average declined to 409,750, the fourth weekly drop and the lowest level since Sept. 1.
To cope with the ailing economy, which fell into recession in March, companies have cut production, trimmed hours and let workers go.
Even if the economy does bounce back in the spring as many economists hope, analysts said the unemployment rate — a lagging economic indicator — will continue to rise in the coming months because companies will be reluctant to hire workers back quickly.
"I think the employment situation will remain fairly bleak," said William Cheney, chief economist at John Hancock.
Many economists believe the jobless rate will top out at around 6.5 percent by June or July, plateau for a while, and start going down in the fall or winter.
"It’s entirely likely to see the unemployment rate go up even after an economic recovery has been declared," said Carl Tannenbaum, chief economist with LaSalle Bank/ABN AMRO. "Corporations will make sure they are healthy before they begin rehiring."
To revive the economy, the Federal Reserve cut interest rates 11 times last year, something that many economists believe will set the stage for an economic recovery in the first half of this year.
A spate of recent economic reports provided some signs that the recession might be bottoming out.
On Wednesday, the Institute for Supply Management reported that a rise in new orders to factories helped push its key gauge of manufacturing activity higher in December.
Reports released last week showed consumer confidence rebounded in December, home sales surged in November and demand for many big-ticket items posted gains in November.
Adding to that good news, the Commerce Department said in a report released Thursday that construction activity rose by a solid 0.8 percent in November, led by a sharp increase in spending on big government projects. Commercial projects, including hotels and industrial complexes, by private builders also posted gains.
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