U.S. Initial Jobless Claims Rose by 8,000 Last Week to 455,000
By Will Edwards
Washington, April 24 (Bloomberg) -- The number of Americans filing new claims for state unemployment benefits unexpectedly rose last week to the highest in more than a year.
States received 455,000 applications for jobless benefits, up from 447,000 in the prior week, the Labor Department said. Claims have held above 400,000 for 10 straight weeks, signaling a deteriorating labor market.
Companies keep firing workers to reduce costs as the economy struggles to gain strength. In February and March, almost a half- million jobs were lost, while the unemployment rate held close to an eight-year high. More job cuts may restrain consumer spending.
Claims are ``at a level that's consistent with a stagnant labor market,'' said Ian Morris, chief economist at HSBC Securities in New York, before the report. ``We won't get a big bounce in jobs in the postwar environment.''
Economists had projected that claims would total 425,000 in the week ended Saturday after the 442,000 originally reported for the previous week, based on the median of 29 forecasts in a Bloomberg News survey. The number of claims last week was the highest since week ended March 30 of last year.
The government will probably report next week that the unemployment rate this month rose to 5.9 percent from March's 5.8 percent, based on the median of 20 estimates in a Bloomberg News survey of economists. The rate reached an eight-year high of 6 percent in December. Job losses last month probably totaled 50,000 after 108,000 in March, the survey found.
The four-week moving average of claims, which smoothes out volatility in the weekly numbers, rose to 439,250 from 426,000. Claims have averaged 411,438 so far this year. That compares with an average of 404,310 for all of 2002, when the economy expanded 2.4 percent.
Continuing Claims
The number of workers continuing to receive jobless benefits increased to 3.589 million in the week that ended April 12 from 3.547 million the prior week. That's the highest since the week ended Nov. 2, 2002. Some 38 states and territories reported an increase in claims, and 15 showed a decrease.
The insured unemployment rate, which tends to track the overall jobless rate, held at 2.8 percent.
Now that the fighting in Iraq has ended, Federal Reserve policy makers are keeping an eye on statistics such as weekly jobless claims and retail sales, which provide a more current gauge of the economy's health than data that take weeks or months to gather. Presidents of two of the Fed's regional banks said April 15 that the direction of interest rates will depend on the economy's postwar performance.
Next Fed Meeting
``I cannot predict what will be the appropriate policy setting at the next FOMC meeting,'' William Poole, president of the Federal Reserve Bank of St. Louis, said last week. ``Fed policy will respond as the new information makes the case.''
The Federal Open Market Committee next meets May 6 to consider interest rates. The Fed's benchmark target rate for loans between banks is 1.25 percent, the lowest in 41 years.
There's no sign of slowing in job-cuts announcements in the airline and travel industries. The Air Transport Association, a trade group whose members include major U.S. airlines, said the carriers' traffic for the week ended April 13 fell 11 percent from a year earlier. Traffic to and from the Pacific region dropped 36 percent, mainly because of concern about severe acute respiratory syndrome, or SARS, a pneumonia-like illness.
After trimming the number of flights it offers, US Airways Group Inc. is cutting 890 more flight attendant jobs by the end of June. America West Holdings Corp., owner of the eighth-largest U.S. airline, said it is cutting about 250 management, professional and administrative jobs, mainly at its head office near Phoenix, to reduce costs by at least $100 million.
Orders Falling
The lower demand is trickling down to airplane parts makers like BE Aerospace Inc., the world's largest maker of airplane seats. The company said Monday it will cut more jobs this quarter on top of 1,400 reductions already announced.
Other companies are trimming costs because new orders are trickling in. Last week, the Federal Reserve Bank of Philadelphia's factory index registered the lowest reading for new orders since November 2001. An index of employment decreased to minus 12.5 from minus 8.8.
PeopleSoft Inc. said Tuesday it will cut 200 jobs because customers are limiting purchases of the company's software, which manages tasks such as processing payroll and tracking inventory. The workforce reduction will affect about 2.4 percent of PeopleSoft's 8,180 employees.
Some companies are hiring. Geico Corp., the No. 5 U.S. auto insurer, said it will add as many as 2,000 sales and customer service representatives by the end of the year, according to spokeswoman Christine Tasher. Geico currently employs about 20,000.
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