JOBLESS claims tumble but still at level suggesting weak demand for workers
Thursday, November 8th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ New claims for state unemployment insurance posted a big decline last week but remained high enough to suggest that the terror attacks and the sinking economy sapped demand for some workers.
For the work week ending Nov. 3, new jobless claims tumbled by a seasonally adjusted 46,000 to 450,000, the Labor Department reported Thursday. That followed a drop of 11,000 the week before.
Last week's decline pushed new claims to their lowest level since the week ending Sept. 15. That earlier report, however, didn't capture layoffs resulting from the Sept. 11 attacks because most affected workers weren't able to file applications for jobless benefits that week. In the two weeks following that report, jobless claims rocketed.
The more stable four-week moving average of new claims, which smoothes out week-to-week fluctuations, also declined last week to 487,250, the lowest level since early October.
The number of laid-off workers drawing jobless benefits rose to 3.72 million for the work week ending Oct. 27, an 18-year high.
In an effort to prevent the economy from sinking deeper into recession, the Federal Reserve cut a key interest rate Tuesday by a half-point, the third cut of that size since the attacks and the 10th rate reduction this year.
Economists are hoping that lower borrowing costs will induce consumers and businesses to spend and invest, which could prevent further weakening of the economy.
Still, a big fear among analysts is that rising unemployment and lingering fears about more attacks and anthrax scares might cause consumers to keep their pocketbooks and wallets shut.
The nation's unemployment rate soared from 4.9 percent in September to 5.4 percent in October and companies eliminated 415,000 jobs, the biggest one-month drop in 21 years. Economists predict the jobless rate will move higher in coming months and payrolls will continue to be trimmed.
The economy shrank at a 0.4 percent rate in the July-September quarter and many economists are predicting a bigger drop in the current quarter. That would meet one common definition of a recession: two consecutive quarters of declining economic output.
Economists are hopeful that the Fed's aggressive easing, President Bush's tax relief enacted earlier this year and new tax cuts and increased government spending being contemplated by Congress for economic stimulus should lead to a recovery by the second half of next year.
For the work week ending Oct. 27, 25 states and territories reported a decrease in new claims for unemployment benefits and 28 reported an increase. The state information lags a week behind the national figures and is not seasonally adjusted.
California reported the biggest decline in claims, by 4,473, because of fewer layoffs in the construction, retail, motion picture and wholesale trade businesses.
Michigan reported the biggest increase in claims, up by 3,895, stemming from layoffs in the automobile industry.