/www.bloomberg.com/ By Siobhan Hughes
Washington, Oct. 3 (Bloomberg) -- The number of U.S. workers filing new claims for state unemployment benefits rose last week as companies announced thousands of new job cuts amid a flagging economic recovery.
States received 417,000 applications for jobless benefits in the week that ended Saturday, up from 412,000 the week before, the Labor Department said. It was the sixth straight reading above 400,000, a level that economists associate with a weak job market.
SBC Communications Inc., Fidelity Investments and Bombardier Inc. all announced job cuts in the past week, adding to pressure on workers. The U.S. economy grew at a 1.3 percent annual rate in the second quarter, the slowest in nine months.
``This recovery has not lived up to expectations, and earnings remain under pressure, so business planners must trim expenses, and that includes layoffs,'' said William Sullivan, an economist at Morgan Stanley in Jersey City, New Jersey. ``There has been a steady deterioration in the labor market.''
Economists had expected claims to rise to 410,000 last week from the previously reported 406,000 for the prior week, based on the median of 31 forecasts in a Bloomberg News survey. The four- week moving average of claims, a less-volatile indicator, rose to 423,000, a five-month high, from 420,500.
U.S. Treasury securities fell after the report. The Treasury's 4 3/8 percent note maturing in August 2012 declined 3/32 point, pushing the yield up 1 basis point to 3.68 percent at 8:40 a.m. New York time. A basis point is 0.01 percentage point.
Jobs Report Tomorrow
The Labor Department tomorrow is to issue its monthly jobs report, which economists surveyed by Bloomberg News expect to show that the unemployment rate rose to 5.9 percent in September, based on the median of 59 estimates. In August the rate was 5.7 percent. The claims numbers also fit in with a Conference Board survey showing that the percentage of consumers who said jobs are hard to get rose to 25.5 in September, the highest since March 1996.
The number of people continuing to collect state jobless benefits rose to 3.681 million in the week that ended Sept. 21. It was the fourth straight increase and compares with a 19-year high of 3.83 million in the week that ended May 3.
Workers in the telecommunications and financial services industries have been hit especially hard. SBC Communications, the No. 2 U.S. local-telephone company, said last week it would cut 11,000 jobs by 2003 as it loses customers to rivals. Bombardier, the largest maker of trains and small planes, also said last week it would fire 1,980 aerospace workers as corporate travel falls.
Fidelity Job Cuts
And Fidelity Investments said Monday it would eliminate 1,695 jobs, or 5.4 percent of its workforce, after 2 1/2 years of falling stock prices thinned assets under management at the biggest U.S. mutual fund company.
The jobless rate will probably rise to an average of 6 percent in the final three months of 2002, a Bloomberg News survey conducted Sept. 18 through Sept. 26 found. The most pessimistic economist in the survey, Avery Shenfeld of CIBC World Markets Inc., predicted unemployment would average 6.4 percent in the 2003 first quarter.
Weekly jobless claims have averaged 406,750 so far this year, compared with 406,000 last year.
The insured unemployment rate, which tends to track the U.S. jobless rate, held at 2.9 percent in the week that ended Sept. 21.
The Labor Department said 34 states and territories reported a decrease in new claims during the week that ended Sept. 21, while 19 states and territories reported an increase.
The U.S. economy slowed to a 1.3 percent annual growth rate in the second quarter from a 5 percent pace in the first three months of 2002. Growth probably rebounded to a 3.5 percent rate in the third quarter, according to a Bloomberg News survey that was conducted from Sept. 18 through Sept. 26.