U.S. Initial Jobless Claims Rose by 38,000 Last Week to 445,000
By Siobhan Hughes
Washington, April 3 (Bloomberg) -- The number of U.S. workers filing new claims for state unemployment benefits rose to the highest in almost a year as companies followed through on planned job cuts in a struggling economy.
States received 445,000 applications for jobless benefits, up from 407,000 the prior week, the Labor Department said. For seven straight weeks, claims have exceeded 400,000, which is viewed by economists as a sign of weak employment conditions.
The number of unemployed continuing to collect jobless insurance rose the week before last to the highest in four months, a sign that fired workers are having trouble finding new jobs. Companies reduced payrolls for a second month in March and the jobless rate rose to 5.9 percent, economists say the government will report tomorrow.
Companies ``are not willing to take the risk of hiring people beyond the bare minimum needs, and given any opportunity they will cut staff,'' said Pierre Ellis, a senior economist at Decision Economics in New York, before the report. The labor market `is very, very poor.'' He projects that this year, the jobless rate will exceed the eight-year high of 6 percent reached in December.
Jobs are essential for a recovery because employment provides the income for consumer spending, which accounts for two-thirds of the U.S. economy. Economists had projected that claims would total 410,000 after the 402,000 originally reported for the prior week, based on the median of 38 forecasts in a Bloomberg News survey. Claims last week were the highest since 452,000 in the week ended April 13, 2002.
``We don't have any specific information to explain the increase,'' said Tom Stengle, a Labor Department spokesman. Unadjusted jobless claims rose to 370,004 last week from 361,749.
Four-Week Average
The four-week moving average of claims, which smoothes out volatility in the weekly numbers, rose to 426,250 from 423,750. Claims have averaged 406,150 so far this year. That compares with 405,000 last year, when the U.S. grew 2.4 percent.
The number of workers continuing to receive jobless benefits increased to 3.608 million in the week that ended March 22 from 3.501 million the prior week. It was the highest since the week that ended Nov. 16, when the total was 3.61 million.
The report adds to evidence that the economy is continuing a slump that began in February. Manufacturing declined in March for the first time in five months, an industry report showed Tuesday, while consumer spending stalled in January and February, the government said last week.
Job Cuts
The jobless rate probably rose to 5.9 percent last month, while the economy eliminated 35,000 positions, the Labor Department is expected to report Friday. Some 343,000 jobs have been lost since the end of 2001, when most economists say the recession ended. Companies need growth to pick up before boosting hiring.
AOL Time Warner's America Online unit said on Tuesday it was firing 420 customer-service workers to help reduce annual costs by more than $100 million. Advertising sales are falling at the Internet service provider and the company lost subscribers for the first time ever in the fourth quarter.
The economy probably grew at a 1.8 percent rate in the first quarter, according to the median of 32 forecasts in a Bloomberg News survey. Growth was at a 1.4 percent pace in the fourth quarter.
Some economists are optimistic that growth will snap back in the second half of the year once the war in Iraq is resolved. For corporate executives, that may mean a return to hiring.
Growth Forecast
``I don't want to speculate on the shape of the curve coming out of the war, but obviously if demand increases, our companies will be able to hire people back,'' said Eastman Kodak Co. Chief Executive Daniel Carp in an interview yesterday.
The insured unemployment rate, which tends to track the U.S. jobless rate, held at 2.8 percent in the week that ended March 22.
The Labor Department also said that 15 states and territories reported an increase in new claims during the week that ended March 22, while 38 states and territories reported a decrease.
Growth will accelerate to a 3.5 percent rate in the third quarter and a 3.7 percent pace in the fourth quarter, according to a survey released March 24 by Bloomberg News.
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