The number of U.S. workers filing new claims for jobless benefits rose last week, Labor Department data showed today, largely pushed up by auto plant shutdowns related to Chrysler's bankruptcy, Reuters reported. Initial claims for state unemployment insurance benefits increased by 32,000 to 637,000 in the week ended May 9, the latest setback to hopes that the U.S. recession was nearing an end. Even more troubling, the number of people staying on the benefit rolls after collecting an initial week of aid touched a record high for the 15th straight week early this month. Weekly jobless claims, which are being watched closely for signs as to when the 17-month-old recession might bottom, reversed an easing trend of the previous two weeks. A Labor Department official said "a good part of the increase is due to automotive states and claims." "The economy is probably declining at a slower rate, but it's not reached a turning point," said Steven Ricchiuto, chief economist at Mizuho Securities in New York. He said rising unemployment would likely "lengthen the downturn." U.S. stocks brushed off the disappointing data as investors snapped up technology shares after a recent sell-off, but the news drove a bid for U.S. government debt, driving up Treasuries prices. CHRYSLER BANKRUPTCY FUELS LAYOFFS Chrysler began shutting its 30 manufacturing plants on May 1, a day after filing for bankruptcy. On Thursday Chrysler informed U.S. dealers it planned to cut 25 percent of its retail showrooms and was seeking approval to terminate franchise agreements with 789 of 3,181 dealerships from June 9. With General Motors' future still to be resolved, analysts said claims for jobless aid could rise further. "We're going to see more filings from the auto sector. It's not just the manufacturers, it will go down to the supply chain, and we still have to deal with GM," said Ricchiuto. An easing of initial claims in the prior two weeks had suggested the pace of job losses was slowing. In addition, the government said last week that nonfarm payrolls had dropped by 539,000 in April, the smallest decline for any month since October. The jobless claims data came on the heels of a report on Wednesday that showed retail sales fell 0.4 percent last month, tempering hopes the U.S. downturn would soon end.
