October 23, 2008 / 12:38 PM / in 11 years

Jobless claims advance more than forecast

WASHINGTON (Reuters) - U.S. workers lined up for jobless benefits in unexpectedly large numbers last week as the trauma in financial markets continued to hammer the economy, data showed on Thursday.

Job seekers waits in line outside a Monster.com job fair in Los Angeles, California July 23, 2008. REUTERS/Fred Prouser

Worse yet, the outlook for the future grew more bleak as companies announced deeper job cuts to stop the financial bleeding caused by the credit crisis, which was on full display in a dismal earnings season on Wall Street.

“We think this month we’ll see more than 200,000 jobs lost,” said Nigel Gault, chief U.S. economist at Global Insight in Lexington, Massachusetts.

“We’re looking at the economy contracting in the fourth quarter very sharply, certainly contracting in the first quarter, maybe contracting in the second quarter as well. Going through that whole period with GDP actually declining, all the time that’s happening, you’re going to see heavy job losses.”

The number of U.S. workers filing new claims for jobless benefits rose by 15,000 last week, the Labor Department said.

Initial claims for state unemployment insurance benefits increased to a seasonally adjusted 478,000 in the week ended October 18 from a revised 463,000 the prior week.

Former U.S. Federal Reserve Chairman Alan Greenspan told Congress on Thursday he expected significant rise in layoffs and unemployment.

Goldman Sachs Group Inc (GS.N) will soon add to the gloom, with plans to cut 10 percent of its total staff, or almost 3,300 jobs, a source familiar with the matter said on Thursday.

Chrysler LLC said it was closing one assembly plant early and eliminating a shift at another, resulting in 1,825 job cuts, following a loss of more than $1 billion for the first half of the year.

Brunswick Corp (BC.N), the world’s largest maker of recreational boats, said it will begin closing or furloughing seven fiberglass boat plants in the fourth quarter.

BEHIND THE NUMBERS

Analysts polled by Reuters had forecast 470,000 new claims versus a previously reported count of 461,000 the week before. The Labor Department said that the effects of Hurricane Ike in Texas added roughly 12,000 claims to the total.

“It just reinforces the fact that we’re going to continue to see erosion in the labor market this winter and next year,” said Michael Woolfolk, senior currency strategist at Bank of New York Mellon in New York.

The four-week average of new jobless claims, a better gauge of underlying labor trends because it irons out week-to-week volatility, declined to 480,250 from 484,750 the week before. This was the lowest reading since late September, but remained at a high level.

This measure has mounted steadily as the U.S. housing slump chilled growth and crimped hiring.

The number of people remaining on the benefits roll after drawing an initial week of aid decreased 6,000 to 3.72 million in the week ended October 11, the most recent week for which data is available.

Analysts estimated so-called continued claims would be 3.72 million. It was the 26th straight week that claims were above 3 million in a sign that the slowing economy is making it harder for U.S. workers to find jobs.

Reporting by Alister Bull in Washington; additional reporting by Wanfeng Zhou, Herb Lash and Burton Frierson in New York, Editing by Chizu Nomiyama

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