Initial Claims at Lowest Rate Since January - Auto Plants Restart

The rate of new claims for jobless benefits fell to the lowest level since January, and a close look at the pattern of layoffs in the automotive industry provided additional good news for auto workers.

The government said that initial claims fell by 52,000 -- a drop significantly more than any economists had expected. In addition, the new claims data appears to have been significantly effected by positive circumstances in the auto industry.

A Labor Department official said there had been far fewer automotive and other manufacturing layoffs last week than anticipated. Historically in July many auto plants are commonly idled. This year however many of those same plants sat idle earlier in the year as automakers entered bankruptcy and restructuring plans. Those plants are just now coming back on-line.

For instance, after emerging from bankruptcy protection and finalizing a deal with the Fiat Group, Chrysler resumed production of vehicles at seven assembly plants in the US, Canada, and Mexico the week of June 29. And GM attorneys are expected to lead the new General Motors out of bankruptcy protection on Friday with associated factory production restarts to follow shortly.

As the 2009 recovery gets underway, these auto plant restarts will no doubt lead to renewed optimism for US auto workers and further boost rebounding factory production.