Jobless claims rise to highest since March 2002

The number of newly laid off people signing up for jobless benefits last week unexpectedly climbed to its highest point in more than six years as the faltering economy forced companies to cut back.

The Labor Department reported Thursday that new applications filed for unemployment insurance rose by a seasonally adjusted 7,000 to 455,000 for the week ending Aug. 2. The increase left claims at their highest level since late March 2002.

A program to locate people eligible for jobless benefits played a role in the increase, a Labor Department analyst said. However, the analyst couldn't say how much of a role.

The latest snapshot of layoff filings was worse than analysts expected. They were forecasting new claims to drop to around 430,000.

The data disappointed Wall Street and the White House. The Dow Jones industrials fell more than 100 points in morning trading.

"The job market isn't strong right now as we work through the downturn in housing and high energy prices. We would like to see more job creation," said White House spokesman Tony Fratto. He credited the government's stimulus program as a helpful cushion.

With layoffs rising and new jobs harder to find, there's growing worry that consumers will retrench later this year as the fortifying impact of the government's tax rebates disappear — spelling more trouble for the economy.

Wal-Mart, the world's largest retailer, and Costco Wholesale Corp. reported solid sales for July. However, Wal-Mart's sales came in a bit below Wall Street forecasts. The company noted that shoppers are increasingly running out of money and projected that sales would slow in August as rebate checks dry up.

Many apparel stores including Limited Brands Inc., Abercrombie & Fitch Co. and Pacific Sunwear of California remained in a malaise.

On the layoffs front, the new filings for unemployment benefits were distorted somewhat by the outreach program to notify people that they could qualify for additional benefits under a new law.

When people went to state claims offices to apply for these extended benefits, state officials discovered that some were eligible for — but haven't filed for — their initial unemployment benefits, the Labor Department analyst said. That accounted for some of last week's increase, he said.

Meanwhile, the four-week moving average of claims, which smooths out weekly fluctuations, rose to 419,500 last week, the highest since mid-July 2003.

The number of people continuing to collect unemployment benefits went up by 31,000 to 3.3 million for the week ending July 26, the most recent period for which that information is available. That was the highest since early December 2003.

Among the companies announcing job cuts in late July or early August were: General Motors Corp., Weyerhaeuser Co., and Starbucks Corp. Bennigan's restaurants owned by privately held Metromedia Restaurant Group, are closing, driving more people to unemployment lines.

Squeezed by high energy prices and fallout from housing and credit troubles, employers clamped down even more on hiring in July. The nation's unemployment rate jumped to a five-year high of 5.7 percent, the government reported last week. Employers cut jobs every month so far this year, driving up losses to 463,000.

Economists expect another half million jobs to be eliminated this year alone. The jobless rate could hit 6.5 percent by the middle of next year.

The country is getting pounded by many negative forces, the Federal Reserve said Tuesday.

"Labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction and elevated energy prices are likely to weigh on economic growth over the next few quarters," the Fed said.

Against that backdrop, the Fed decided to leave a key interest rate steady Tuesday. The Fed can't afford to cut rates anymore because it could aggravate inflation. On the other hand, boosting rates too soon would deal a blow to the economy and the ailing housing market.

AFTER AIR PORT INDIAN RAILWAY TRACK GOING TO BE PRIVATISE

Global railway companies have emerged the top contenders on technical parameters for the country’s first railway station modernisation and operation project in New Delhi, the first of private-public partnership (PPP) schemes.

The railway companies on the eligible list include state-owned Russian Railways, which operates 85,000 km of railways in that country, the ¤25-billion Deutsche Bahn AG, a subsidiary of the German National Railways, state-owned China Railways 18 Bureau Group, and government-controlled Grandi Stazioni SPA, which runs 13 major railway stations in Italy.

All these international companies have tied up with local partners to bid for the Rs 6,000-crore New Delhi railway station modernisation project. The successful bidder will modernise infrastructure at the passenger terminal, which handles 0.3 to 0.35 million passengers a day.

Traffic is expected to grow 4 per cent annually. The plan also includes real estate development on about 86 hectares of land comprising the railway station, offices, parking, public spaces and commercial blocks.

The company will also operate the station for a stipulated time period that will be fixed during the financial bidding.

The railways will select six companies on the basis of their scores (based on a complex formula that includes years of experience, net worth and turnover among other criteria) in the technical bid, after which they will be called for a financial bid.

Deutsche Bahn AG, a German national railway company with over 200,000 employees, and an annual turnover of more than ¤25 billion and serving two billion passengers, tied up with Indian Mumbai-based realtor DB Realty Pvt Ltd. The consortium has emerged with the highest score in the technical qualification.

The Grandi Stazioni SPA consortium has renovated Italy’s 13 largest railway stations and several major European railway stations.

China Railways 18 Bureau Group, which in third place, has also built highways and rail projects in the UAE, Thailand and Sudan among others.

Russian Railways has tied the knot with Delhi-based DS Construction, which recently built the Delhi-Gurgaon highway. Russian Railways, with its 165 subsidiaries and 1.2 million employees, handles nearly 80 per cent of Russia’s transportation services and has executed railway network projects in countries like Libya, China and Iran as well as in central Europe.

For the railways the success of the New Delhi station project is crucial since it has announced similar schemes for 22 other stations, Patna, Secundarabad, Bangalore and Bhopal amongst them.