Jobless claims in U.S. drop as auto plants come back on line

State Breakdown

Thirty-two states and territories reported an increase in claims, while 21 reported a decrease. These data are reported with a one-week lag.

Auto plants typically shut down to retool for the new model year, often playing havoc with the claims data in July. Michigan, Pennsylvania and Ohio were among the states reporting the biggest jump in claims two weeks ago, and all cited dismissals at manufacturing plants.

Ford Motor Co. said it will idle most of its North American assembly plants for one week this summer instead of two, to increase output. Three of Chrysler Group LLC’s assembly plants and all except one of its engine, transmission and stamping factories will skip a summer shutdown this year. Since its 2009 bankruptcy, General Motors Co. hasn’t had a formal summer shutdown, Mark Reuss, president of the company’s North American operations, told reporters in May.

Initial jobless claims reflect weekly firings and typically wane before job growth climbs.

June Payrolls

Payrolls rose by 195,000 workers for a second month in June, indicating the U.S. is poised for faster growth as it shakes off the impact of fiscal policies that reigned in growth earlier in the year. The jobless rate stayed at 7.6%, close to a four-year low.

Some companies are adding to headcount. Del Frisco’s Restaurant Inc. is taking advantage of an abundance of job seekers to hire more managers, boosting its general and administrative costs for its collection of steakhouses, which are located in cities including Chicago, Las Vegas and Charlotte, North Carolina.

“We’re hiring more managers, we’re looking for quality people when they’re available and bringing them in as we’re looking to accelerate our growth,” Thomas J. Pennison, chief financial officer, said in a July 16 conference call.

Meanwhile Brown & Brown Inc., an insurance company based in Daytona Beach, Florida, has seen little improvement in employment in some areas of the country.

Limited Hiring

“In the Pacific Northwest, I think people are feeling better about the economy, but we’re not seeing much new hiring,” Chief Executive Officer J. Powell Brown said in a July 16 earnings call. “People are doing more with the same amount of employees.”

Federal Reserve Chairman Ben S. Bernanke said in testimony before Congress yesterday that “the job situation is far from satisfactory.” Bernanke said the central bank’s asset purchases “are by no means on a preset course” and could be reduced more quickly or expanded as economic conditions warrant. Today will mark the second day of his semi-annual testimony on the economy and monetary policy.

Several Fed officials have said they want to see more signs employment is picking up before they’ll begin scaling back $85 billion in monthly bond purchases, based on minutes from the last policy-making committee meeting.

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