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Jobless claims rise as companies cope with sluggish economic growth

April 5th, 2007 10:45 pm by Associated Press



WASHINGTON - Newly laid-off workers signed up for unemployment benefits at a faster pace last week as companies try to cope with sluggish growth in the national economy.


The Labor Department reported Thursday that new applications filed for jobless benefits rose by a seasonally adjusted 11,000, to 321,000, for the work week ending March 31.


Although the increase left jobless claims at their highest level since the beginning of March, the report suggested that the labor market is holding up fairly well to strains from the troubled housing market and struggles faced by the automotive industry and other manufacturers.


"The jobless figures are indicating that employers are not so concerned about economic conditions that they are cutting back costs and laying off workers in a significant manner," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group.


On Wall Street, stocks rose. The Dow Jones industrials gained 30.15 points to close at 12,560.20.


The showing on new jobless claims filings last week was in line with analysts' expectations. They were forecasting claims to total around 320,000.


In the prior week, ending March 24, new claims fell by 8,000, to 310,000, a slightly smaller decline that first reported.


Thursday's report also showed that the four-week moving average of new claims, which smooths out week-to-week fluctuations, came to 315,750 last week, a decrease of 1,500 from the prior week. That left the four-week moving average at its lowest point since early February.


In other encouraging news, the number of people continuing to collect unemployment benefits dropped by 25,000 to 2.49 million for the work week ending March 24, the most recent period for which this information is available. That was the lowest since late January.


Those figures suggest the job market has thus far managed to remain in good shape even though the overall economy is stuck in a sluggish spell in terms of growth.


The claims numbers point to "little change in the underlying pace of layoffs," said Omair Sharif, strategist at RBS Greenwich Capital.


Economists predict companies boosted payrolls by around 135,000 in March, which would be up from 97,000 new jobs added in February. The unemployment rate, meanwhile, is expected to edge up from 4.5 percent to 4.6 percent for March, a figure that would still be considered low by historical standards. The government releases the employment report for March on Friday.


While that report will shed light on hiring, Thursday's jobless claims figures suggest that "on the firing side the numbers are still subdued," said Reaser.


One of the things the Federal Reserve is watching closely is whether labor costs, which have been growing, could add to inflation. Another thing the Fed is keeping close tabs on is business investment. If it turns significantly weaker, that could spell trouble for overall economic activity.


Against that backdrop of economic crosscurrents, analysts predict the Fed will leave a key interest rate at 5.25 percent for a while. That rate hasn't moved since August. Before that, Fed policymakers had steadily lifted rates for two years to combat inflation.


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