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Auto industry sparks surge in jobless claims

Government says 637,000 people filed for first-time unemployment benefits last week. Continuing claims at all-time high for 15th week in a row.

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By Ben Rooney, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- Auto industry job losses led to a surge in the number of people filing initial claims for unemployment benefits last week, according to a government report released Thursday.

And, in the most recent data available, the number of people filing claims on an ongoing basis rose to a record high for the 15th straight week.

A total of 637,000 people filed new claims for jobless benefits in the week ended May 9, the Labor Department said. That's an increase of 32,000 from an upwardly revised 605,000 in the previous week.

The tally was higher than expected. Economists surveyed by Briefing.com had forecast 610,000 initial claims.

The majority of last week's increase was due to layoffs and furloughs in the automotive industry, a Labor Department analyst said.

Chrysler LLC declared bankruptcy late last month and General Motors (GM, Fortune 500) is restructuring ahead of a government deadline at the end of May.

The 4-week moving average of initial claims, which smoothes out volatility in the measure, rose 6,000 to 630,500.

"It looks like we're getting some effect from the problems in the auto industry, and I think that's going to continue" said Michael Strauss, chief economist at Commonfund. "Away from that, the backdrop has improved."

Initial claims had trended lower in recent weeks, raising hopes that the labor situation was stabilizing and that mass layoffs were becoming less frequent.

But the weak economy continues to deter employers from hiring, as indicated by the increasing number of people filing jobless claims for multiple weeks.

In the week ended May 2, the most recent data available, 6,560,000 continuing claims were filed. That's the highest number since the Labor Department started tracking the data in 1967 and an increase of 202,000 from the previous week.

Since the recession began in December 2007, the economy has shed about 5 million jobs. The unemployment rate now stands at a 25-year high of 8.9%.  To top of page

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