U.S. jobless claims exceed 5 million

The total number of people in the U.S. receiving unemployment benefits increased more than expected during the week ending Feb. 20, pushing past 5.1 million, according to MSNBC.com.

New jobless claims last week rose to 667,000 from 631,000 the previous week; analysts had expected a small drop in jobless claims. The four-week average of initial claims increased to 639,000, which is the highest in more than 26 years.

These numbers seem to reinforce the fact that not only are employers continuing to shed jobs to survive in the current economy, but unemployed people are having a difficult time finding jobs. Consumers also have been scaling back on spending, which, in turn, has affected employers.

Companies are "becoming extremely cautious and ... shelving their capital spending plan and working with the minimum possible work force," says Zach Pandl, an economist at Normura Securities International, New York.

The number of people receiving unemployment insurance for more than one week reached more than 5.1 million; it was about 2.8 million one year ago. An additional 1.4 million people were receiving benefits under an extended unemployment compensation program, bringing the jobless claims total to 6.5 million.

Employers cut a total of 600,000 jobs in January, increasing the unemployment rate to 7.6 percent. More job losses were announced this week, including 12,000 from JPMorgan Chase & Co., New York; 169 in the National Football League (NFL), as well as a 20 percent pay cut for NFL commissioner Roger Goodell; and 650 at Spartanburg, S.C.-based Milliken & Co. textile facilities.

Date : 2/27/2009