NEW YORK (Reuters) – The number of U.S. workers filing new claims for jobless benefits rose more than expected last week, government data showed on Thursday, pushed up by auto plant shutdowns related to Chrysler’s bankruptcy.
U.S. producer prices rose faster than expected in April, government data showed on Thursday, driven by a surge in food costs.
Initial claims for state unemployment insurance benefits increased 32,000 to a seasonally adjusted 637,000 in the week ended May 9, reversing an easing trend of the previous two weeks. A Labour Department official said “a good part of the increase is due to automotive states and claims.” Analysts polled by Reuters had forecast new claims rising to 610,000.
The Labor Department said the Producer Price Index climbed 0.3 percent after declining 1.2 percent in March. Food prices rose 1.5 percent in April, the biggest increase since January 2008. Food costs rose on a record jump in egg prices, along with soaring prices for vegetables and meat. Excluding food, the headline PPI would have increased 0.1 percent. Analysts polled by Reuters had forecast a 0.1 percent rise in the overall index.
Nigel Gault, Chief U S Economist at IHS Global Insight, Lexington, Massachusetts said: “The Labor Department said there was a good part of automotive claims, without being precise and the obvious culprit would be the Chrysler bankruptcy. They essentially shut down, just like that. The autoworkers do tend to file pretty quickly. That’s probably what’s come into this week’s number, and at least on initial claims.
“I think that there are signals that the claims have maybe topped out, but I don’t think there is any signal that they’re going to drop rapidly. These claims are likely to stay high for a long time, which means we’re going to be losing jobs for a long time.
“The continuing claims today were not good. The total people claiming went up by 202,000, that’s a big increase for one week. Of course these numbers are volatile, but that’s not a good signal for where the unemployment rate is going to continue to rise very rapidly.”
David Resler, Chief Economist, Nomura Securities, New York explained :”We’re still facing a very tough job market…
“When we get out of the recession and the economy is no longer declining, it’s not going to feel like a great economy. When you get 637,000 people filing for claims in the latest week, it’s a pretty good indication we haven’t stop declining yet. When we do stop declining, we’ll see claims in the 500s, maybe in the 400s, but we’re not quite there yet.
“It is the week in which Chrysler filed (for bankruptcy) and laid off everybody in their factories. It could be that that explains part of the increase…
“I think it is just underscoring how difficult it’s going to be to get the economy growing again.”