- The Washington Times - Friday, July 10, 2009

A quirk in the timing of plant closings at General Motors and Chrysler caused the filing of initial jobless claims reported last week to fall to its lowest levels since January.

However, the total number of people collecting unemployment benefits from regular state programs during the prior week set another record, the Labor Department reported Thursday.

Meanwhile, retail sales in June for chain stores open at least a year (excluding Wal-Mart, which no longer reports monthly data) were down more than 5 percent from June 2008, the International Council of Shopping Centers reported Thursday.

“June sales continued their very weak performance that has persisted since December,” said Michael Niemira, chief economist for the council.

The stock market barely reacted to the day’s news. The Dow Jones Industrial Average edged up 4.76 points, or 0.06 percent, to close at 8,183.17. The broad-based Standard & Poor’s 500-stock index increased 3.12, ending the day at 882.68. The tech-heavy Nasdaq Composite index advanced 5.38 points, finishing at 1,752.55

Initial jobless claims fell 52,000 to 565,000 during the week ending July 4. It was the first time that new claims were below 600,000 since the week of Jan. 24.

Analysts said the sizable decline was due in large part to the fact that General Motors and Chrysler laid off many workers in May and June. At that time, they closed several plants as they began implementing their massive restructuring programs related to their bankruptcy filings. Normally, the auto industry shuts down during the first week of July, so their plants can be retooled to produce next year’s models.

In its seasonal-adjustment calculations for last week, the Labor Department anticipated the traditional flood of applicants from GM and Chrysler, who had actually filed for benefits in the spring. Because those workers did not show up at unemployment offices for their first time last week, the seasonally adjusted number of first-time applicants fell by 52,000.

Non-seasonally adjusted claims increased by 18,000 to 578,000.

Continuing unemployment claims in regular state programs for the week ending June 27 unexpectedly jumped by 159,000, reaching 6.88 million. It was new record for data that was first compiled in 1967.

In addition, there were major jumps in two federal jobless programs. Workers collecting payments from the extended-benefits program increased by 65,000 to 347,000 for the week ending June 20. States also reported that 2.52 million persons were collecting Emergency Unemployment Compensation benefits, reflecting an increase of 81,000.

“Unable to find new jobs, the unemployed are running out of regular benefits and are having to move on to supplemental rolls. If enrollment in both the extended-benefits and Emergency Unemployment Compensation programs is included, it is clear that the labor market is still contracting,” said Andrew Gledhill of Moody’s Economy.com.

The Commerce Department reported that wholesale inventories declined for the ninth month in a row, falling 0.8 percent in May.

“Sales have been extremely weak in the wake of the collapse in the financial markets this past fall,” said Kim Whelan, an economic analyst at Wells Fargo Securities.

“Lack of sales activity will prevent any rebuild in inventories” through the remainder of the year - and the boost in economic activity that rebuilding would provide.

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