The number of U.S. workers filing new claims for jobless benefits edged down last week, but the high level of applications still suggests the job market recovery remains sluggish.
Initial unemployment claims fell by 6,000 to 472,000 in the week ended Aug. 28, the Labor Department said in its weekly report Thursday. New claims for the previous week, ended Aug. 21, were revised upward to 478,000 from 473,000.
Economists surveyed by Dow Jones Newswires had predicted filings would decline by 3,000.
The four-week moving average, which aims to smooth volatility in the data, declined by 2,500 to 485,500. The prior week's average was revised to 488,000.
Separately, U.S. productivity in the second quarter fell more than previously thought, a big drop that reflects the cooling of the economy.
This latest data on claims come just one day before the Labor Department is due to release its employment report for August, and economists are predicting it will be a bit grim. Unemployment currently stands at 9.5%, and that figure Friday is expected to creep up to 9.6% as U.S. employers drop another 110,000 people off the payrolls.
Particularly worrisome is the lack of new jobs in the private sector. In a troubling sign, new data released Wednesday by Automatic Data Processing Inc. showed that private-sector jobs in the U.S. fell by 10,000 in August. Economists had expected to see a gain of 17,000 jobs.
Many economic indicators, including data on housing and employment, are pointing to a slowdown in U.S. growth. Federal Reserve officials at their last meeting Aug. 10 raised concerns about the disappointing trajectory of the recovery and decided to take steps to prevent the Fed's securities portfolio from shrinking.
In the Labor Department's claims report Thursday, the number of continuing claims -- those drawn by workers for more than one week in the week ended Aug. 21 -- fell by 23,000 to 4,456,000 from the preceding week's revised level of 4,479,000. Continuing claims are reported with a one-week lag.
The unemployment rate for workers with unemployment insurance for the week ended Aug. 21 was 3.5%, unchanged from the prior week's unrevised rate.
The report's state-by-state breakdown of new claims for the week ended Aug. 21 show that the largest decrease in claims took place in California, which saw a fall of 5,983 claims due to fewer layoffs in the service industry.
Florida had the largest increase in claims with a rise of 1,906 due to layoffs in the construction, trade and service industries.
Productivity Declines
Nonfarm business labor productivity decreased by a seasonally adjusted annualized rate of 1.8% compared to the prior quarter, the Labor Department said Thursday.
Economists surveyed by Dow Jones Newswires were expecting second-quarter productivity to have been revised down to a 1.9% decline. The Labor Department, in an original estimate of second-quarter productivity released a month ago, had said it fell by 0.9%. First-quarter productivity rose an unrevised 3.9%.
Productivity is output per hours worked. The analysts expected such a sharp revision after the government last week lowered its sights on the economy during April through June. New data said the economy grew only 1.6% in the second quarter -- and not by 2.4% as originally projected. Economic growth in the first quarter was a solid 3.7%.
Productivity serves as an important gauge of U.S. companies' efficiency. The second-quarter drop broke a string of five straight gains. Productivity usually picks up sharply at the end of recessions and eases as businesses boost hiring or work hours to fill demand.
The report Thursday said second-quarter nonfarm business output rose 1.6%, at an annualized rate. That's lower than the 5.0% gain of the first quarter.
Hours worked, meanwhile, climbed 3.5% April through June, the largest increase since first-quarter 2006.
A growing workweek signals employers have reached the limit of efficiency as they use existing staff to wring out as much work as they can.
However, taken together, the slowdown in output along with the increase in hours suggests companies might have to increase payrolls in order to move production forward.
Manufacturing productivity rose 4.1% in the second quarter, with an 8.4% surge in output, the data Thursday showed.
Manufacturing has been leading the struggling U.S. economy away from the deep recession. In one recent example of an effort to boost productivity, appliance maker Whirlpool Corp. (WHR) said this week that it will build a new plant in Tennessee. The move replaces an old facility and would add 130 staff to an existing work force of 1,500.
Labor is scheduled Friday to release its monthly employment report. Economists surveyed by Dow Jones Newswires are estimating the report will show U.S. joblessness climbed to 9.6% in August from 9.5% in July. Non-farm payrolls are seen shrinking further.
The report Thursday said unit labor costs -- a key gauge of where prices are heading -- increased at a 1.1% annualized rate in the second quarter. The revision met the expectations of economists. Originally, Labor said costs crept higher by 0.2% April through June. First-quarter costs fell 4.6%, revised from a previously estimated 3.7% decline.
Hourly compensation in the nonfarm business sector fell 0.7% in the second quarter. Real compensation, adjusted for inflation, was flat.
