New claims for jobless benefits drop to lowest since January

WASHINGTON (AP) — The number of newly laid-off workers filing initial claims for jobless benefits last week fell to the lowest level since early January, largely due to changes in the timing of auto- industry layoffs.

Continuing claims, meanwhile, unexpectedly jumped to a record high. Though layoffs are slowing, jobs remain scarce, and the unemployment rate is rising, which some economists worry could weaken or delay a recovery.

The unemployment rate rose to 9.5 percent last month and is expected to top 10 percent by the end of this year.

Separately, many retail chains reported disappointing June sales, as consumers are saving more and spending less.

New claims for unemployment insurance plummeted by 52,000 to a seasonally-adjusted 565,000, the Labor Department said Thursday. That’s significantly below analysts’ expectations of 605,000 for the week ending July 4, according to Thomson Reuters. The last time new claims were below 600,000 was the week of Jan. 24.

“This is not as positive as it looks,” Jennifer Lee, an economist at BMO Capital Markets, wrote in a note to clients. “There are a number of special factors at play here, including the fact that the holiday-shortened week skewed the data.”

The drop resulted partly from technical factors, a Labor Department analyst said.

Auto layoffs that normally take place in early July, as factories are retooled to build the next year’s models, occurred in the spring instead as General Motors Corp. and Chrysler LLC implemented sweeping restructuring plans.

The department’s seasonal adjustment process expected a large increase in claims from autoworkers and other manufacturing workers, the analyst said. Since that didn’t occur, seasonally-adjusted claims fell.

The nonseasonally adjusted figure increased by about 17,000 to 577,506 initial claims.

The retail weakness cut across all sectors but hit mall-based clothing stores particularly hard. Companies also are cutting wages and jobs, limiting Americans’ buying power.

Still, continuing claims jumped 159,000 to 6.88 million, the highest on records dating from 1967. Analysts had expected 6.71 million continuing claims.

Continuing claims had fallen in two of the previous three weeks. The data lag initial claims by a week.