The number of Americans filing first- time claims for jobless benefits unexpectedly jumped last week to a 26-year high, signaling a deepening deterioration in the labor market. Initial jobless claims increased by 35,000 to 626,000 in the week ended Jan. 31, the highest level since October 1982, the Labor Department said today in Washington. The total number of people collecting benefits jumped to a record 4.788 million a week earlier. Companies ranging from Macy’s Inc. to PNC Financial Services Group Inc. are announcing job cuts as consumers and businesses rein in spending and that is likely to prompt even further pullbacks in coming weeks. The government is forecast to report tomorrow that the U.S. lost 540,000 jobs in January. “We still have yet to see the worst of the layoffs and job losses,” Michael Gregory, a senior economist at BMO Capital Markets in Toronto, said before the report. “The fact that the pace of job declines is quickening does add to the political pressure to get something done and to compromise.” Treasuries rose, driving down yields, and stock index futures were lower. The benchmark 10-year note yielded 2.89 percent at of 8:35 a.m. in New York, down 4 basis points from yesterday. Futures on the Standard & Poor’s 500 Index were down 1 percent. Economists forecast claims would fall to 580,000 from a previously reported 588,000, according to the median forecast of 41 estimates in a Bloomberg News survey. Projections ranged from 480,000 to 620,000. Claims for the prior week were revised up to 591,000. Productivity Rises Productivity, a measure of employee output per hour, rose at a higher-than-forecast 3.2 percent annual rate in the fourth quarter following a 1.5 increase the previous three months, Labor also reported today. Labor costs climbed at a 1.8 percent rate, less than anticipated. The four-week moving average of claims, a less volatile measure, climbed to 582,250 from 543,250 the previous week, today’s report showed. “This is a very elevated level and consistent with large payroll losses,” Michael Feroli, an economist at JPMorgan Chase & Co. in New York, said before the report. “If jobless claims remained in this range over the next couple weeks, they would signal another large payroll loss in February.” The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.6 percent in the week ended Jan. 24. Breakdown by State Forty-eight states and territories had a decrease in new claims for the week ended Jan. 24, while five reported an increase. Economists project the government will report tomorrow that the unemployment rate rose to 7.5 percent in January, the most in 16 years, according to the median projection in a Bloomberg survey. The U.S. lost 2.6 million jobs last year, the most since 1945. Earlier today, Monster Worldwide Inc. said its employment index for January fell 26 percent from a year earlier. Compared with December, online job availability dropped in 18 of the 20 industry categories and 22 of 23 occupational categories. ADP Employer Services said yesterday companies in the U.S. cut an estimated 522,000 jobs in January. The U.S. economy is “in for a tough several months,” President Barack Obama said Feb. 1 in an interview with NBC. “It’s going to take a number of months before we stop falling and then a little longer for us to get back on track.” Stimulus Bill Obama is urging Congress to quickly pass economic stimulus legislation. The House of Representatives last week passed a $819 billion package of tax cuts and spending. The Senate is currently working on a plan that would be closer to $900 billion. ArvinMeritor Inc., a U.S. maker of commercial-truck and auto parts, said yesterday it is firing more than 1,500 employees, extending shutdowns and reducing work weeks at all plants as it tries to cut costs. Other firms that have announced firings include Macy’s, which said this week it is cutting 7,000 jobs. Rockwell Collins Inc., an aircraft-parts producer, said on Feb. 3 it will eliminate 600 positions. The same day PNC said it plans to cut 5,800 jobs by 2011.

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