Jobless Claims Rise by 2,000

Thursday, August 3rd 2000, 12:00 am
By: News On 6

WASHINGTON (AP) — The number of Americans filing new claims for unemployment benefits edged up slightly last week but remained at a level indicating extremely tight labor market conditions.

The Labor Department reported Thursday that 276,000 laid off workers filed new claims for jobless benefits last week. That was an increase of 2,000 from the previous week as claims filings returned to a more normal pattern after being skewed by layoffs associated with retooling in the auto industry.

The government on Friday will release its report on unemployment for July. Economists were expecting the jobless rate to hold steady at 4 percent as the booming U.S. economy keeps unemployment at the lowest levels in three decades.

The tiny increase of 2,000 in jobless claims for last week was smaller than had been expected. Many economists had been predicting an increase of around 18,000 following declines totaling 46,000 in the previous two weeks. Before that, claims had risen by 27,000 to the highest level in a year.

This seesaw pattern was caused by layoffs that occur in the auto industry each year as manufacturers retool factories for the new model year. Layoffs increase dramatically for a week or two only to drop by similar amounts in the following weeks as autoworkers are first laid off and then rehired.

The Federal Reserve has raised interest rates six times over the past 14 months in an effort to slow the super-charged U.S. economy down to a more moderate pace of growth and keep inflation under control.

The Fed next meets on Aug. 22 and until recently, Wall Street investors were growing more confident that the central bank would leave rates unchanged at that meeting, believing they have done enough for now to slow growth.

However, last week, the Commerce Department reported that the gross domestic product, the country's total output of goods and services, did not slow down as everyone had expected in the April to June quarter but instead accelerated to a growth rate of 5.2 percent.

While reports this week have shown new home sales falling to the slowest pace in 30 months, economists say the rapid growth in the GDP report may be enough to push the Fed to raise rates for a seventh time this month.