Apr 5, 2002 3 min read

WASHINGTON (AP) – Many more Americans filed claims for unemployment insurance last week, but the economic significance was clouded by a technical fluke. Laid-off workers seeking to take advantage of a federal extension for benefits were required to submit new claims. That requirement accounted for most of the big jump in new claims as reported by the Labor Department Thursday, private economists said.

For the work week ending March 30, new claims for jobless benefits shot up by a seasonally adjusted 64,000 to 460,000, the highest level since the beginning of December.

Given thonomists continued to be optimistic that the jobs market- battered by the recession that began in March 2001 and jolted by the Sept. 11 terror attacks- was getting better.

After having slashed payrolls, U.S. companies in February added jobs for the first time in seven months. Economists believe payrolls grew again in March, by 50,000 to 85,000 jobs. The government will release the employment report for March on Friday.

“I really believe labor market conditions are improving,” said Richard Yamarone, economist with Argus Research Corp. “Consumers have been so upbeat and confident, something that is predominantly driven by employment status.”

Consumer confidence soared in March to its highest level since Sept. 11.

On Wall Street, stocks moved higher. The Dow Jones industrial average closed up 36.88 points at 10,235.17.

Tom Stengle, an analyst with the Labor Department, said that a portion – he did not know exactly how much – of the big rise in claims resulted from a federal provision requiring workers whose benefits had run out to file a new claim in order to become eligible for an extension of federal jobless benefits.

Because of this requirement, the weekly claims figures – usually a good proxy for layoffs – could be volatile in the next few weeks.

Congress recently passed legislation signed into law by President Bush that provided a 13-week extension of jobless benefits.

The more stable four-week moving average of new claims, which smoothes out week-to-week fluctuations, also rose last week to 403,750, the highest since the middle of January.

Said Merrill Lynch economist Gerald Cohen: “These increases are technical and do not reflect underlying economic fundamentals.”

Still, many economists believe that the nation’s unemployment rate – now at 5.5 percent – probably ticked up to 5.6 percent in March because job growth wasn’t strong enough to take care of people entering the labor force.

Businesses slashed thousands of jobs to cope with the recession, and company profits were hit hard. So economists say companies will be reluctant to quickly hire back laid-off workers until profits recover and executives are convinced the recovery is here to stay.

“Some firms are still laying off workers in search of profitability, even as others begin the rehiring process,” said Paul Taylor, chief economist for the National Automobile Dealers Association.

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On the Net:

Jobless claims: http://www.doleta.gov/