November 20, 2008 / 2:04 PM / 11 years ago

UPDATE 1-US weekly jobless claims surge to 16-year high

(Adds details, market, analyst reaction)

By Lucia Mutikani

WASHINGTON, Nov 20 (Reuters) - The number of U.S. workers filing new claims for jobless benefits surged last week to their highest level in 16 years, Labor Department data showed on Thursday, as a harsh economic environment forces employers to cut back on hiring.

Initial claims for state unemployment insurance benefits were a seasonally adjusted 542,000 in the week ended Nov. 15 from a revised 515,000 the previous week. That was higher than analysts’ forecast for a reading of 505,000 new claims.

U.S. stock futures tumbled on the data and Treasury debt prices edged higher, attracting a safe-haven bid. The U.S. dollar deepened losses against the yen.

The latest data has added to fears that the U.S. economy faces a deep recession and paints a gloomy outlook for the labor market.

“This report paints a pretty bleak job picture for mid-November and reinforces the comments from the Fed yesterday almost guaranteeing a sizable Fed rate cut at the next Fed meeting on Dec. 16,” said Cary Leahey, economist at Decision Economics in New York.

“It means we’re probably facing another payroll employment report showing November job losses in the vicinity of 200,000.”

The Federal Reserve has slashed its economic growth outlook through 2009 to minimal levels, minutes from the central bank’s Oct 28-29 policy meeting released on Wednesday showed.

A Labor Department official said there were no special factors influencing the report.

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.

Continuing claims were 4.012 million in the week ended Nov. 8, the latest data available, up from 3.903 million the prior week and the highest since December 1982.

Analysts estimated so-called continued claims would be 3.92 million. The insured unemployment rate, a measure of the workforce receiving unemployment benefits, was 3.0 percent in the week ended Nov 8, rising from 2.9 percent the prior week.

This was the highest reading since June 2003. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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