WASHINGTON—Government data due out Thursday is expected to show that the number of newly laid off people filing claims for jobless benefits went down last week after spiking to a five-year high.
The Labor Department's tally of new filings submitted for unemployment insurance is forecast to show an increase to 430,000 for the week ending Aug. 2, according to the consensus estimate of Wall Street economists surveyed by Thomson/IFR. The data will be released at 8:30 a.m. EDT.
New applications for jobless benefits rose a seasonally adjusted 44,000 to 448,000 in the prior week. That left claims at their highest level in five years.
The number of people continuing to draw unemployment benefits is expected to dip slightly to 3.22 million, from 3.28 million.
Among the companies announcing job cuts in late July or early August were: General Motors Corp., Weyerhaeuser Co., and Starbucks Corp. Bennigan's restaurants owned by privately held Metromedia Restaurant Group, are closing, driving more people to unemployment lines.
Even if economists' forecasts for claims to drop to 430,000 proves correct, it wouldn't change the broader picture of a struggling labor market. Layoff filings in the 400,000 range are viewed as flashing a potential recessionary signal.
Squeezed by high energy prices and fallout from housing and credit troubles, employers clamped down even more on hiring in July. The nation's unemployment rate jumped to a five-year high of 5.7 percent, the government reported last week. Employers cut jobs every month so far this year, driving up losses close to a staggering half million -- 463,000 in all.
Economists expect another half million jobs to be eliminated this year alone. The jobless rate could hit 6.5 percent by the middle of next year.
The country is getting pounded by many negative forces, the Federal Reserve said Tuesday.
"Labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction and elevated energy prices are likely to weigh on economic growth over the next few quarters," the Fed said.
Against that backdrop, the Fed decided to leave at key interest rate steady Tuesday. The Fed can't afford to cut rates anymore because it could aggravate inflation. On the other hand, boosting rates too soon would deal a blow to the economy and the ailing housing market.
