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US jobs picture dims, offsets brighter GDP

City A.M. Reporter
FRESH signs of weakness in US job markets yesterday underlined the strains faced by a recession-struck American economy that contracted slightly less in the first quarter than previously thought.<br /><br />The Labour Department said the number of US workers filing new claims for unemployment benefits last week jumped unexpectedly by 15,000 to a higher-than-forecast, seasonally-adjusted total of 627,000.<br /><br />Continued claims, which gauge how many Americans were still on jobless rolls after an initial week of claims, rose 29,000 to 6.738m in the week ended 13 June, the latest period for which the data was available.<br /><br />The worse-than-expected jobs data outweighed a Commerce Department report showing gross domestic product, the gauge of total output within US borders, contracted at a 5.5 per cent annual rate in the first quarter instead of 5.7 per cent.<br /><br />That followed contractions in national output of 6.3 per cent in last year&rsquo;s fourth quarter and 0.5 per cent in the third quarter. The first estimate for second-quarter US economic performance will not be available for another month.<br /><br />The GDP figure was the final reading for the first quarter. The Commerce Department initially said it shrank 6.1 per cent, then revised that to 5.7 per cent and finally to a 5.5 per cent fall.<br /><br />It is expected to slip again in the second quarter ending 30 June, though less severely than in the first quarter. The GDP report reflected an economy still deep in recession when 2009 began. But a report by the Paris-based OECD this week predicted the US downturn will bottom out this year and be followed by a soft recovery in 2010.