Jobless claims climb
WASHINGTON (AP) – The number of U.S. workers filing claims for jobless benefits climbed to the second-highest level of the year last week as struggling companies handed out more pink slips. The Labor Department reported Thursday that new applications for jobless benefits rose by a seasonally adjusted 30,000 to 442,000 for the work week ending April 12.
That increase pushed claims to their highest point since March 29, when claims hit 443,000, the highest level of the year.
For nine straight weeks, claims have been above the 400,000 mark, a level associated with a stagnant job market. Thursday’s figures were weaker than economists were expecting.
“It’s depressing,” said Bill Cheney, chief economist at John Hancock Financial Services. “The economy is in a precarious state right now.”
Businesses coping with lackluster profits and uneven demand from customers have been trying to keep a lid on costs. Against that backdrop, companies have been reluctant to increase capital spending and go on a hiring spree, major forces restraining the economy’s recovery. Some of the rise in claims last week was attributed to layoffs in the automobile industry, a Labor Department analyst said.
Paul Taylor, chief economist at the National Automobile Dealers Association, said that some auto makers are curbing production to work off inventories of unsold vehicles, which began to pile up as demand slackened.
The more stable, four-week moving average of initial jobless claims also rose last week by 3,500 to 424,750, the highest level in nearly a year.
“People who have a job are probably nervous about keeping it because the economy is in fragile shape,” said Clifford Waldman, economist at the Manufacturers Alliance/MAPI, a research group.
Economists believe the nation’s unemployment rate – now at 5.8 percent – is likely to rise in the months ahead.
Federal Reserve Chairman Alan Greenspan and his colleagues are hopeful that once the war in Iraq is over, the economy will return to good health. But even if the economy starts improving a bit later this year, the jobless rate probably will creep up because job growth won’t be strong enough to accommodate the expectation that an improved climate will attract a lot more job seekers. The number of unemployed people continuing to draw jobless benefits went up by 76,000 to 3.57 million for the week ending April 5, the most recent period for which this information is available. That marked the highest level in continuing jobless claims since Nov. 9, 2002. Economists don’t expect companies to step up hiring or capital investment until they feel secure about the economy, their profits and customer demand.
After sliding into recession in 2001, the economy has been struggling to get back on firm footing. The economy’s growth, however, has been characterized by a jagged pattern, where a quarter of strength is followed by a quarter of weakness. That climate – along with uncertainties surrounding the war with Iraq – gave already cautious businesses another reason to clamp down on spending and investment.
The Federal Reserve decided in March to hold the federal funds rate at 1.25 percent, a 41-year low, with the hope that will spur more spending and investment and help along the economy. The funds rate is the Fed’s main lever to influence economic activity.
President Bush, recognizing congressional skepticism over the size of his original economic stimulus proposal for a $726 billion tax cut, is now calling for $550 billion worth of reductions over 10 years.
Treasury Secretary John Snow and other department officials are fanning out around the country to drum up support, hitting some 15 states this week and next. “This blitz underscores the fact that this department’s top priority is enactment of the president’s jobs and growth plan,” said Treasury spokesman Rob Nichols.
__
On the Net:
Jobless claims: http://www.doleta.gov/