Jobless claims edge up, but economic recovery outlook improves
Thursday, April 18th 2002, 12:00 am
By: News On 6
WASHINGTON (AP) _ New claims for unemployment insurance inched up even as a key gauge of economic activity suggested the country is recovering from recession.
For the work week ending April 13, new claims for jobless benefits edged up by a seasonally adjusted 1,000 to 445,000, the Labor Department reported Thursday.
Meanwhile, the New York-based Conference Board said its Index of Leading Economic Indicators nudged up 0.1 percent in March to 112.3 after holding steady in February.
``The recovery in the leading index suggests the economy is poised for growth through late summer,'' said Conference Board economist Ken Goldstein.
One of the reasons why layoffs and unemployment have been rising even though the economy is improving is because businesses, which had shed workers during the slump, want to make sure the rebound is here to stay before hiring them back. That's why employment is considered a lagging economic indicator.
On Wall Street, stocks moved lower after Nokia reported a drop in profits and sales and chip maker Advanced Micro Devices acknowledged that business remains difficult. The Dow Jones industrial average was off 52 points and the Nasdaq index lost 16 points in morning trading.
A government analyst said that the layoffs picture continues to be clouded by a technical fluke, which has caused the level of claims to be inflated over the last several weeks.
The distortion is coming from a requirement that laid-off workers seeking to take advantage of a federal extension for benefits must required to submit new claims.
Congress recently passed legislation signed into law by President Bush that provided a 13-week extension of jobless benefits.
Because of the refiling requirement, the weekly claims figures _ usually a good proxy for layoffs _ could be volatile in the weeks ahead.
The more stable four-week moving average of new claims, which smoothes out week-to-week fluctuations, also rose last week to 448,750, the highest level since the middle of November.
Still, Federal Reserve Chairman Alan Greenspan, testifying before Congress Wednesday, believed that the labor market is improving and didn't foresee a period of chronic unemployment.
Businesses added jobs in March for the first time in eight months, a clear sign that the economy is bouncing back from a recession that began in March 2001. But job growth wasn't strong enough to prevent the nation's unemployment rate from rising to 5.7 percent.
Thursday's report also showed that the number continuing to receive unemployment benefits rose to 3.84 million for the work week ending April 6. That was the highest level since Feb. 26, 1983.
Greenspan said that the behavior of consumers and businesses in the coming months will be the key to how strong the economic recovery turns out to be.
Consumers _ whose spending accounts for two-thirds of all economic activity in the United States _ continued buying throughout this recession. Given that, they may not have a lot of pent-up demand coming out of the slump, which would make for a less than sizzling rebound.
Surging oil prices also could damp consumer spending and business investment.
Against this backdrop, Greenspan indicated that the Fed _ which slashed interest rates 11 times last year _ is in not hurry to begin raising them.