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New jobless claims hit highest level in six months

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The employment picture is looking bleaker as applications for jobless benefits rose last week to the highest level in almost six months.

It's a sign that hiring is weak and employers are still cutting their staffs.

First-time claims for jobless benefits edged up by 2,000, to a seasonally adjusted 484,000, the Labor Department said Thursday. Analysts had expected a drop. That's the highest total since February.

Initial claims have now risen in three of the last four weeks and are close to their high point for the year of 490,000, reached in late January. The four-week average, which smooths volatility, soared by 14,250, to 473,500, also the highest since late February.

Analysts said that the unexpected rise in claims suggests hiring in August won't be much better than July. The economy added a net 12,000 jobs last month after excluding the loss of temporary census positions.

The jobless claims report "represents a very adverse turn in the labor market, threatening income growth and consumer spending," Pierre Ellis, an economist at Decision Economics, wrote in a note to clients.

The prospect of more layoffs added to this week's grim outlook for the economy, which began Tuesday when the Federal Reserve lowered its assessment of the recovery.

Investors were bracing for another rocky day on Wall Street. Dow Jones industrial average futures, which were down about 50 points before the report came out, fell further. They were down nearly 90 points before the market opened.

Economists closely watch weekly claims, which are considered a gauge of the pace of layoffs and an indication of employers' willingness to hire.

The government's July jobs report, released Friday, showed that the economy lost a net total of 131,000 jobs last month. Excluding the impact of the elimination of 143,000 temporary census jobs, the economy added a meager 12,000 positions, as layoffs by state and local governments almost canceled out weak hiring by businesses.

Thursday's report on jobless claims indicates that trend may not change soon. Claims fell steadily last year from their peak of 651,000, reached in March 2009. But they have mostly leveled out this year at or above 450,000. In a healthy economy with rapid hiring, claims usually drop below 400,000.

The rise in claims could be a sign private employers are ramping up layoffs, which declined as recently as June, according to a separate government report released Wednesday.

Some economists speculate that many census workers whose jobs are finished are requesting unemployment benefits.

Claims could also be rising because of large job cuts by state and local governments, which are struggling with unprecedented budget gaps. State and local governments cut 48,000 jobs in July.

Another possibility is that small companies, facing tight credit, are still reducing their staffs, even as larger corporations slowly resume hiring.

The total number of people receiving benefits dropped 118,000, to 4.45 million, the department said. But that doesn't include another 5.3 million people receiving extended benefits paid for by the federal government, as of the week ending July 24, the latest data available.

During the recession, Congress added up to 73 extra weeks of unemployment benefits, on top of the 26 usually provided by states. That extended program lapsed in early June but was reinstated by Congress last month.

Some companies are still cutting workers. Medical products manufacturer CareFusion Corp. said Wednesday it plans to eliminate 700 jobs, saving the company up to $120 million a year.

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  • Incentive to Stay Home
    Of course the unemployment rate is climbing! What did the administration expect when Obama gave the people good reason to not work for another 73 weeks? The jobs are out there but why work for $400 a week when Obama will pay you $300 a week to stay home? Washington just doesn't get it - or maybe they do.

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  1. Now if he'd just stay there...

  2. Daniel - what about the many US citizens who do NOT follow what the Bible teaches? The Hindus, Jews, Muslims and others who are all American citizens entitled to all rights as Americans?? This issue has NOTHING to do with "What the Bible says..." Keep all Churches separate from State! Pence's ongoing idiocy continues to make Indiana look like a backwards, homophobic state in the eyes of our nation. Can't we move on to bigger issues - like educating our kids?

  3. 1. IBJ should link to the referenced report. We are in the age of electronic media...not sharing information is lazy. Here is a link http://www.in.gov/gov/files/Blue_Ribbon_Panel_Report_July_9_2014.pdf 2. The article should provide more clarity about the make-up of this panel. The commenters are making this item out to be partisan, it does not appear the panel is partisan. Here is a list of the panel which appears to be balanced with different SME to add different perspectives http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&eventidn=138116?formation_id=189603 3. It suggests a by-pass, I do not see where this report suggests another "loop". 4. Henry, based on your kneejerk reaction, we would be better off if you moved to another state unless your post was meant as sarcasm in which case I say Well Done. 5. The article and report actually indicates need to improve rail and port infrastructure in direct contradiction to Shayla commentary. Specifically, recommendation is to consider passenger rail projects... 6. People have a voice with their elected officials. These are suggestions and do not represent "crony capitalism", etc. The report needs to be analyzed and the legislature can decide on priorities and spending. Don't like it, then vote in a new legislature but quit artificially creating issues where there are none! People need to sift through the politics and provide constructive criticism to the process rather than making uninformed comments in a public forum based on misinformation. IBJ should work harder to correct the record in these forums when blatant errors or misrepresentations are made.

  4. Joe ... Marriage is defined in the Bible ... it is mentioned in the Bible often. Marriage is not mentioned once in the US or Indiana Constitution ...

  5. Daniel - Educate me please: what does the Bible have to do with laws? If the government wasn't in the business of marriage to begin with, then it wouldn't have to "define" marriage at all. Marriage could be left as a personal, religious, or otherwise unregulated action, with no ties to taxes, legal status, etc. Then people could marry whomever they want, and all this silliness would go away. Remember to vote Libertarian in November.

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