US jobless claims in surprise fall

New numbers raise hopes that recession is easing, but analysts say rate will still rise.

    GM is one of the major US firms to announce
    further job cuts in recent days [EPA]

    Meanwhile, the US government said that productivity, an important factor in rising living standards, grew at a 0.8 per cent annual rate in the first three months of 2009, slightly better than the 0.6 per cent increase expected by economists.

    The labour department said worker hours had contracted at a nine per cent rate in the first financial quarter of 2009, as companies cut worker hours aggressively to protect company profits.

    And US retail sales for major chain stores were also better than expected, with retailers such as Walmart and Gap reported stronger results than analysts had predicted. 

    US stocks rose following the news, with the Dow Jones Industrial Average opening 54 points higher at 8,566 points.

    The good news was undermined, however, by huge losses of $6bn in the first financial quarter announced by US auto giant General Motors on Thursday.

    GM has already slashed global production by more than 900,000 vehicles, or 40 per cent, as it tried to rein in costs and inventories but still burned through $10.2bn in cash after revenues were cut almost in half.

    Further losses

    Despite hopes that the decline in job losses may signal that layoffs have peaked, economic analysts say they do not expect them to return to pre-recession levels anytime soon.

    The jobless rate is expected to keep rising through the rest of this year even if projections for an end to the recession in the second half of 2009 are accurate.

    Several prominent US firms have announced job cuts in recent days, including GM, which is to eliminate a further 21,000 US factory jobs by next year as part of restructuring plans ordered by the US government.

    Microsoft is also planning to cut 5,000 jobs and said more could follow, while chip maker Atmel last week said it would cut 300 jobs, or five per cent of its work force.

    SOURCE: Al Jazeera and agencies


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