WASHINGTON – New claims for state unemployment insurance rose last week to the highest level since mid-July while the number of laid-off workers drawing unemployment benefits hit a nine-year peak.
On Wall Street, stock prices were mixed Thursday after the previous day's rally. After the first hour of trading the Dow Jones industrial average was down 13 points and the Nasdaq index was up 20 points.
The number of workers filing new applications for jobless benefits increased by a seasonally adjusted 8,000 to 393,000 for the week ending Aug. 18, the Labor Department reported Thursday. That pushed new filings for jobless benefits to the highest level since the week ending July 14, when they stood at 417,000.
In a significant sign of how the yearlong economic slowdown has affected American's ability to get a job, the government reported that the number of workers drawing benefits rose to 3.18 million.
That was the highest level since the number of jobless workers drawing benefits hit 3.21 million in September 1992 as the country was still struggling to emerge from the last recession.
Economists say that both new filings and the number of people remaining in the benefit program are good indicators of the health of the labor market. The new filing shows whether layoffs are rising as companies cut their work force in a slowing economy while the number of people remaining in the program indicates how much trouble laid-off workers are having getting new jobs.
The government reported that the overall unemployment rate remained at 4.5 percent in July, its highest level since the country entered a significant slowdown in growth in the summer of last year.
The overall economy grew at a barely discernible annual rate of 0.7 percent in the April-June quarter, the weakest performance in more than eight years.
Many economists are predicting growth should rebound by the end of this year, reflecting seven interest rate reductions by the Federal Reserve and the nearly $40 billion in tax rebate checks the government is now in the process of mailing out.
However, economists warn that even if the economy does turn up as expected, the jobless rate will still go higher, reflecting the reluctance of employers to add back workers until they are sure the rebound is sustainable.
Many analysts fear that the unemployment rate could top out around 5.2 percent early next year. That level is still low by recent historical standards but well above the three-decade low of 3.9 percent reached last year.
The government said that the four-week moving average for new unemployment claims, a figure that smoothes out week-to-week fluctuations, rose to 378,750 last week, the highest level since the week ending Aug. 4.
The 3.18 million unemployed workers drawing benefits for the week ending Aug. 11 compared to 3.05 million in the previous week.
The data on the total number of people in the benefits program lag a week behind the information on new filings.