American Unemployment Skyrockets

1938
Several hundred Genesee County residents wait outside a new state office that allows them to sign up for unemployment benefits for the first time. Thousands of autoworkers and others lost their jobs in the 1930s as the U.S. economy collapsed.

Jobless claims up but labor market OK

5 July 2007

By JEANNINE AVERSA

WASHINGTON -The number of newly laid off people signing up for jobless benefits went up last week but that didn't darken the big picture of a mostly healthy employment climate across the country.

The Labor Department reported Thursday that new applications filed for unemployment insurance rose by a seasonally adjusted 2,000 to 318,000 for the week ending June 30. The level of claims was slightly higher than the 315,000 that economists were expecting but nevertheless was in a range that pointed to a sturdy job market — aside from pockets of weakness in construction and other industries still feeling the strain of the yearlong housing slump.

The four-week moving average of new claims, which smooths out week-to-week fluctuations, rose by 1,750 last week to 318,500, the highest since late April.

The number of people continuing to collect unemployment benefits increased to 2.57 million for the work week ending June 23, the most recent period for which this information is available. That was the highest since mid-April.

Although job growth has cooled a bit, companies are still hiring at a decent pace.

Economists predict that companies boosted payrolls by around 125,000 in June, which would be a bit slower pace of hiring than the 157,000 positions added in May. The unemployment rate is expected to hold steady at a relatively low rate of 4.5 percent. The government releases the June employment report on Friday.

The job market has remained in good shape even as the economy has endured a nearly yearlong sluggish spell.

One of the reasons the job market has remained decent is because fallout from the sour housing market hasn't spread widely across companies, but rather, has been mostly concentrated in fields such as construction and certain types of manufacturing.

The economy barely budged in the first three months of this year, growing at just a 0.7 percent pace, the weakest in more than four years. The main culprit: the housing slump. Growth in the April-to-June quarter, however, probably rebounded at a pace anywhere from 2.3 percent to just over 3 percent, even as the painful housing slump drags on, economists say.

With the economy on mostly stable footing, the Federal Reserve probably will keep a key interest rate steady at 5.25 percent for the rest of this year.