Stat of the Day: Disappointing Jobs Data
New Jobless Claims Slowing - CNBC
The U.S. Labor Department on Thursday said that initial claims for state unemployment benefits fell to a seasonally adjusted 631,000 in the week ended May 16, compared to a high of 674,000 in late March.
Analysts polled by Reuters had forecast new claims at 630,000.
Still, continuing claims—workers who remain on the rolls of the unemployed -- rose by 75,000 to a record 6.662 million in the week ended May 9. The most severe U.S. recession in decades has already claimed over 5 million jobs since it began in December 2007.
Despite recent declines in the weekly claims data, the labor market remains in perilous shape.
"We need a more convincing decline (in new claims) to signal from the jobless claims perspective that the recession has bottomed out," said John Ryding, chief economist at RDQ Economics in New York.
Employment is often seen as a lagging indicator, and many companies are likely to wait for sustained evidence of an economic revival before hoisting help-wanted signs.
In that vein, the Congressional Budget Office said on Thursday that the economy will likely start growing again in the second half of 2009, but that the jobless rate could peak at more than 10 percent against the current 8.9 percent.
"The companies that bring their costs under control will be the first to start hiring, but I don't think we'll see that a lot until the third or fourth quarter," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.