WASHINGTON – New claims for state unemployment insurance shot up last week to the highest level in nearly nine years, suggesting that workers are having trouble holding onto their jobs in the slumping economy.
The Labor Department reported Thursday that initial applications for jobless benefits unexpectedly rose by 13,000 to a seasonally adjusted 432,000 for the workweek ending June 2. Many analysts were expecting claims to fall.
The increase pushed jobless claims up to their highest level since Sept. 19, 1992, when they stood at 438,000.
The more stable four-week moving average of jobless claims, which smoothes out week-to-week fluctuations, also rose last week to 413,500, the highest point since Oct. 3, 1992.
The economy grew at an anemic annual rate of 1.3 percent in the first three months of this year and many analysts believe it expanded at around the same rate or less in the current quarter. Federal Reserve Chairman Alan Greenspan, in a May 24 speech, said the worst of the slowdown, which started in the second half of last year, may not be over.
To cope with flagging demand, companies have sharply cut production and laid off workers. In May, the unemployment rate edged down to 4.4 percent, but businesses eliminated 19,000 jobs.
To prevent the country from tipping into recession, the Federal Reserve slashed interest rates five times this year, driving borrowing costs down to their lowest point in seven years.
Still, economists are concerned that consumers might curtail their spending — a main force keeping the economy afloat — and send the country into a downturn should the labor market seriously deteriorate in the coming months.
For the workweek ending May 26, 28 states and territories reported an increase in new jobless claims, while 25 reported decreases. The information lags a week behind the national figures and is not seasonally adjusted.
Wisconsin reported the biggest increase, up by 3,352. Officials attributed that to layoffs in the construction, trade and service industries.
Michigan saw claims rise by 2,795, reflecting layoffs in the automobile industry. Puerto Rico reported claims increased by 2,696, and North Carolina said claims rose by 1,698.
The state with the biggest decrease in claims was California, down by 2,153 as construction, service and agriculture companies laid off fewer people.