The Labor Department said Thursday that initial claims for jobless benefits fell to a seasonally adjusted 631,000, down from a revised figure of 643,000 the previous week. That nearly matched analysts' expectations of 630,000 new claims.
Claims jumped two weeks ago as Chrysler LLC shut its factories after filing for bankruptcy protection April 30, putting up to 27,000 hourly employees out of work. Wall Street economists expect factory shutdowns by Chrysler and General Motors Corp. to inflate the initial claims numbers through June.
The number of people continuing to claim unemployment insurance rose to nearly 6.7 million from about 6.6 million, the department said, also close to analysts' expectations. That's the highest total on records dating to 1967 and the 16th straight record.
The data reinforced the notion that while the overall economy may start to pick up later this year, the labor market likely will remain weak into 2010 and beyond.
As a proportion of the work force, the total jobless benefit rolls are the highest since December 1982, when the economy was emerging from a severe recession. The numbers indicate that laid-off workers are having a difficult time finding new jobs.
The continuing claims data lags initial claims by one week.
The four-week average of new claims, which smooths fluctuations, dipped to 628,500, from 632,000, the department said.
Claims had reached a 14-week low of 605,000 earlier this month, from 674,000 in late March, the peak for the current recession. Many economists had seen the drop as a sign that layoffs were easing and the economy could be nearing a bottom.
The auto shutdowns have interrupted that decline, though economists expect the downward trend in new claims to continue once the impact of the auto layoffs has passed.
The Federal Reserve, meanwhile, expects the economy will start to grow again later this year, according to documents released Wednesday. But Fed officials expect the unemployment rate, currently at 8.9 percent, could rise to 9.6 percent this year and remain elevated until 2011.
Some private economists expect the rate to reach 10 percent by the end of this year.
More job cuts have been announced this week. American Express Co. said it will cut about 4,000 jobs, while Medtronic Inc. said it would eliminate up to 1,800 positions and Hewlett-Packard Co. said it would cut 6,400 jobs.
Among the states, Michigan had the largest increase in claims for the week ending May 9. Claims there rose by 16,817, which it attributed to layoffs in the auto industry. The next largest increases were in North Carolina, Virginia, Kentucky and Pennsylvania. Ohio was in the top ten with an increase of 2,082 due to cuts in auto jobs.
California reported the largest decrease in claims of 10,052, which it said was due to fewer layoffs in the service industry. The next largest decreases were in Wisconsin, Kansas, Oklahoma and Washington.