By Bob Willis July 16 (Bloomberg) -- The number of Americans filing claims for unemployment benefits fell last week to the lowest level since January, depressed by shifts in the timing of auto plant shutdowns. Initial jobless claims dropped by 47,000 to 522,000, lower than forecast, in the week ended July 11, from a revised 569,000 the prior week, the Labor Department said today in Washington. The number of people collecting unemployment insurance plunged by a record 642,000, also reflecting seasonal issues surrounding the closures at carmakers. A Labor analyst said the distortions may play havoc with claims data for another couple of weeks. General Motors Co. and Chrysler Group LLC accelerated shutdowns this year heading into bankruptcy, months before the traditional July closings. Through the gyrations, job losses may subside amid signs the housing and manufacturing slumps are easing. “The trend seems to be toward lessening job losses even if we allow for the fact there may be distortions because in July you typically get layoffs in the auto sector,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. “While fewer people are losing their jobs, it is still as hard as it’s been to find a job.” Jobless claims were forecast to decline to 553,000 from an originally reported 565,000 the prior week, according to the median projection of 41 economists in a Bloomberg News survey. Estimates ranged from 480,000 to 605,000. Job Losses Job cuts may be slowing after employers eliminated about 6.5 million positions since the recession began in December 2007, the most of any downturn since the Great Depression. Even so, hiring is limited and economists surveyed by Bloomberg project the jobless rate will exceed 10 percent by early 2010, restraining the consumer spending that accounts for two thirds of the economy. The four-week moving average of initial claims, a less volatile measure, dropped to 584,500 last week from 607,000. Continuing claims dropped to 6.27 million in the week ended July 4 from 6.92 million the prior week. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, plunged to 4.7 percent in the week ended July 4, from 5.2 percent the prior week. Twenty-six states and territories reported an increase in new claims for the week ended July 4, while 27 reported a decrease. These data are reported with a one-week lag. Initial jobless claims reflect weekly firings and tend to rise as job growth -- measured by the monthly non-farm payrolls report -- slows. Fed View Federal Reserve officials expect the U.S. economy to contract less this year than they had anticipated in April, even as unemployment climbs to as high as 10 percent, according to their latest forecasts released yesterday. “Most participants saw the economy as still quite weak and vulnerable to further adverse shocks,” the central bank said in minutes of the Federal Open Market Committee’s June 23-24 meeting. Weekly jobless claims tend to be volatile at this time of the year, when automakers idle workers while they re-equip factories to build new models. Payrolls in June fell more than economists forecast and the unemployment rate reached 9.5 percent, the highest level since 1983, Labor said July 2. Auto Shutdowns GM, which emerged from bankruptcy this month as a majority government-owned carmaker, plans to end the year with 64,000 fewer workers in the U.S., a 30 percent decrease from Dec. 31, the Detroit-based company said this week. Other industries continue to trim workers. Lockheed Martin Corp., the world’s largest defense company, will cut 600 more jobs in New York following the cancellation last month of its contract to develop and build the next U.S. presidential helicopter. The cuts will contribute to a 25 percent reduction in the total number of workers at the Owego facility to about 3,000 by the end of this year from 4,000 in January, spokesman Troy Scully said in an interview on July 14 Advanta Corp., the credit-card company that stopped lending as defaults soared, plans to cut its workforce by about half after shutting off accounts for small-business customers. Advanta will have fewer than 200 employees after the reduction, the Spring House, Pennsylvania-based company said July 10 in a regulatory filing. To contact the reporters on this story: Bob Willis in Washington bwillis@bloomberg.net

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