By Bob Willis Aug. 6 (Bloomberg) -- The number of Americans filing claims for jobless benefits fell last week, a sign more employers have stopped paring staff as the recession eases. Applications dropped by 38,000 to 550,000 in the week ended Aug. 1, figures from the Labor Department showed today in Washington, marking the fifth consecutive week of fewer than 600,000 claims. The total number of people collecting unemployment insurance rose. The pace of job cuts has slowed even as unemployment is projected to exceed 10 percent by early next year. Economists surveyed by Bloomberg News say a report tomorrow will show the jobless rate jumped to the highest in 26 years in July. Stagnating wages and falling home values also mean consumer spending, 70 percent of the economy, will be slow to recover. “Labor market conditions are gradually improving,” Zach Pandl, an economist at Nomura Securities International Inc. in New York, said before the report. Nonetheless, he said, “claims have to continue to fall from these levels before we can expect a rebound in consumer spending.” Economists forecast claims would drop to 580,000 from a previously estimated 584,000, according to the median of 40 projections in a Bloomberg News survey. Estimates ranged from 550,000 to 600,000. The four-week moving average, a less-volatile measure than weekly initial claims, fell to 555,250 from 560,000 the prior week. Continuing Claims The level of continuing claims increased by 69,000 to 6.31 million in the week ended July 25. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 4.7 percent in the week ended July 25. Eight states and territories reported an increase in new claims, while 45 reported a decrease. These data are also reported with a one-week lag. U.S. employers have eliminated 6.5 million positions since the recession began in December 2007, the most of any downturn since the Great Depression. The Labor Department will probably report tomorrow that the economy lost 328,000 jobs in July, according to economists surveyed by Bloomberg, following a decline of 467,000 in June. The jobless rate probably rose to 9.6 percent from 9.5 percent, the survey showed. Many companies continue to cut jobs and hours even as economists forecast a return to growth in the current quarter. Auto Layoffs General Motors Co. may have to cut more U.S. hourly jobs after an offer of buyouts and early retirements fell about 7,500 workers short of the reorganized automaker’s target, Sherrie Childers Arb, a spokeswoman, said in an interview on Aug. 3. She made the remarks after GM announced that more than 6,000 United Auto Workers members, or 11 percent of the hourly workforce, left the company Aug. 1. GM’s latest voluntary exits pushed the total of U.S. hourly workers leaving through buyouts and retirement offers to about 66,000 since 2006. The biggest domestic automaker is shrinking its workforce to match reductions including the shutdown of 14 U.S. plants and 3 warehouses by the end of 2011. Jobless claims tend to be volatile in late June and July when automakers typically halt production and idle workers to re-equip factories to build new models. GM and Chrysler Group LLC halted production earlier than usual as they worked through bankruptcy proceedings. GM emerged from bankruptcy last month and Chrysler did the same in June. Buckeye Partners LP, the Breinigsville, Pennsylvania-based operator of U.S. oil- and gas-product pipelines, said July 20 that it will eliminate about 260 jobs, or 25 percent of its workforce, because of the “current economic environment” and may sell a conduit in the U.S. West. “We must continuously challenge ourselves, particularly in the current economic environment, to ensure that we are positioned to generate the highest utilization of our assets at the lowest cost,” Forrest E. Wylie, chief executive officer of Buckeye’s general partner, said in a statement on July 20. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net

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