Slowdown in auto manufacturing leads to uptick in jobless claims  In the wake of the 9.0-magnitude earthquake and subsequent tsunami that ravaged Japan on March 11, analysts have warned that there could be lasting supply chain disruptions. This week, unemployment claims in the U.S. unexpectedly jumped, which was largely influenced by the slowdown in auto manufacturing caused by the natural disasters, according to a newly released report.

Bloomberg reports that the U.S. labor market is the seemingly most recent victim of the slowdown to the Japanese economy. In the week ended April 30, the number of claims for U.S. unemployment benefits soared by 43,000 to 473,000, according to the Bureau of Labor Statistics. Among other causes, the uptick in jobless claims was spurred by a spring break holiday in New York and auto shutdowns caused by the disaster in Japan, the news service reported.

The automobile industry was particularly hard-hit by the slowdown to the Japanese economy. Auto assembly plants in Japan are mostly located in the northeast part of the country, which was particularly battered by March's natural disasters. A majority of Japanese automakers have struggled to resume production in the storms' wake. Further, a growing number of U.S. carmakers, including Ford and GM, have had to scale back production as well because they rely on Japanese factories for critical components used in manufacturing.

The logistics and supply chain disruptions couldn't come at a worse time for the global automotive industry: Worldwide sales of cars have soared over the past 16 months following a severe contraction during the depths of the recession. GM, for example, posted a $3.2 billion profit during the first fiscal quarter of 2011, representing the carmaker's best first quarter in over a decade, Detroit News reports.

However, the slowdown in production could start to eat into profit margins in the newly resurgent car industry, stalling job growth - so critical to the U.S. economic recovery - and putting a dent in earnings. In April, Ford announced that it would scale back production in the U.S. as it awaited parts from Japanese suppliers, and Toyota has also slowed manufacturing as it grapples with damage done to its major Japanese automotive assembly plants.

Nonetheless, some analysts are still bullish on the U.S. labor market, affirming the jump in jobless claims was mostly related to seasonal distortions. Ultimately, many industry watchers and automobile manufacturers assert supply chain disruptions emanating from Japan won't be felt until the second half of the year.
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  1. Despite all the problems they're having, they’re still able to make cars… check out these amazing videos on cars being built.