Jobs are scarce with nearly 6.7 million on benefit rolls.
By CHRISTOPHER S. RUGABER
The Associated Press
WASHINGTON – A sign that jobs likely will remain scarce through next year emerged Thursday in a report showing a record number of Americans receiving unemployment aid.
And plant shutdowns by Chrysler LLC and General Motors Corp. could further harm the economy in coming months. Economists are just starting to assess the full impact of the auto industry’s woes, which affect thousands of suppliers and dealers.
The number of people who are continuing to receive jobless benefits rose to nearly 6.7 million from about 6.6 million, the Labor Department said. That’s the highest total on records dating to 1967 and the 16th straight weekly record.
New jobless claims fell to a seasonally adjusted 631,000 last week, down from a revised figure of 643,000 the previous week. First-time claims, which had dropped to 605,000 earlier this month, reflect the pace of layoffs.
But many economists said even though the number of layoffs are still likely declining, they may not be doing so as fast as previously appeared.
Factory closings by Chrysler and GM, most of them temporary, probably will boost the number of jobless claims into the summer, economists said. The plant closings also are likely to cause layoffs at auto suppliers, which employ about 3 million workers.
“We expect that the auto shutdowns will be lifting claims for the next couple of months,” said Dean Maki, an economist at Barclays Capital.
Claims had jumped two weeks ago as Chrysler idled its factories after filing for bankruptcy protection. That move put up to 27,000 hourly employees out of work.
GM, meanwhile, is suspending work at 13 factories on a rolling basis over the next two months.
GM and Chrysler also have announced they will sever their contracts with around 2,000 dealerships nationwide. The likely result will be shutdowns for many. The National Automobile Dealers Association, a trade group, said the automakers’ action could produce 100,000 job losses.
Even with the auto industry’s woes, many analysts expect the economy to recover and start growing slightly by the fall.
Abiel Reinhart, an economist at JPMorgan Chase amp& Co., said the auto sector “won’t be a big enough drag to really change the big picture,” particularly since many of the layoffs are temporary.
But the economic news was not all bad. In a separate report, a private research’s group forecast of economic activity rose more than expected in April. It was the first gain in seven months.