November 20, 2008 / 1:38 PM / 10 years ago

Jobs data miserable, regional factories slump

NEW YORK (Reuters) - The number of American workers on the unemployment rolls surged to the highest in a quarter century and a regional manufacturing gauge slumped as U.S. economic misery intensified.

A man wears a sale advertisement as he walks along 5th Avenue in New York, November 19, 2008. REUTERS/Mike Segar

The reports on Thursday were the latest in a growing body of evidence that shows the United States has probably entered one of the worst downturns in decades, while economists expect the world’s leading economies to be in recession for about a year.

The number of U.S. workers filing new claims for jobless benefits jumped last week to their highest level in 16 years, Labor Department data showed, suggesting next month’s jobs data will add to the 1.2 million jobs already eliminated this year.

“No rest for the weary,” said Carl Lantz, U.S. interest rate strategist at Credit Suisse in New York.

“It looks like we’ll have another ugly payroll number in December.”

Worse yet, the number of workers remaining on jobless benefits, or continuing claims, were the highest since December 1982, rising to 4.012 million in the week ended November 8, the latest data available, from 3.903 million the prior week.

An index of factory conditions in the U.S. Mid-Atlantic region fell to another 18-year low in November, a survey showed.

The Philadelphia Federal Reserve Bank said its business activity index fell to minus 39.3 from minus 37.5 in October. Any reading below zero indicates contraction in the region’s manufacturing sector.

A key measure of inflation in the survey, the prices paid index, fell to its lowest since the survey’s launch in 1968.

This gives the Federal Reserve leeway to fight the economic downturn by keeping rates low but could also heighten concerns that the U.S. may enter a destructive deflationary spiral, especially after data on Wednesday showed consumer prices fell at a record pace in October.

On Wall Street, U.S. stocks extended earlier losses after the weaker-than-expected Philadelphia Fed survey, though they later edged higher.

Government bonds, which benefit from signs of economic weakness, tested earlier session highs. The dollar edged up against the euro but remained sharply weaker versus yen.

Initial claims for state unemployment insurance benefits were a seasonally adjusted 542,000 in the week ended November 15 from a revised 515,000 the previous week, the Labor Department said.

That was higher than analysts’ forecast for a reading of 505,000 new claims.

The four-week moving average of new jobless claims, a better gauge of underlying labor trends because it irons out week-to-week volatility, rose to 506,500 from 490,750 the week before, the highest since the start of 1983.

The U.S. Conference Board’s index of Leading Economic Indicators fell more than expected in October, as stock prices dropped and consumer expectations weakened, the research group said on Thursday.

Slideshow (4 Images)

The index fell 0.8 percent to 99.6 after rising by a revised 0.1 percent in September.

“The economy is contracting, and the pace of contraction may intensify over the next few months,” said Ken Goldstein, economist at the Conference Board.

Additional reporting by Lucia Mutikani in Washington; Editing by Andrea Ricci

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