New Jobless Claims Remain Steady; Four-week Moving Average Declines

Bloomberg Business News

WASHINGTON _ The number of Americans filing first-time jobless claims held steady last week, suggesting employers may be easing up on the pace of layoffs.

New claims for state unemployment insurance were unchanged at a seasonally adjusted 369,000. In the previous week, claims fell by 27,000, originally reported as a 28,000 decline.

Meanwhile, the four-week moving average for claims, a less volatile gauge of employment conditions, fell to 377,250 from 378,750 the previous week.

"While we do have a weaker labor market situation, it's not that bad," said Carl Steen, an economist with Maria Fiorini Ramirez Inc. in New York, who sees claims leveling off at between 360,000 and 375,000 per week.

Still, he said that if the June monthly employment report, which will be released today, shows labor market conditions deteriorated further, new claims will accelerate once again.

Before Thursday's Labor Department report, economists anticipated an increase of 4,000 first-time jobless claims to 372,000, according to a survey by Bloomberg Business News.

The jobless claims report comes as Federal Reserve policymakers met a second day to consider whether to lower the overnight bank lending rate. The Fed began raising rates in February 1994 to stave off the inflation that often accompanies an economic expansion. Now, though, analysts and investors are concerned that the economy has slowed so much that it risks falling into recession.

One factor acting to restrain new claims last week: Many people likely waited to file for unemployment benefits until after the new quarter began July 1, because the level of benefits is tied to the most recent government cost of living adjustments, analysts said.

The overall trend in both the weekly jobless claims and monthly employment reports suggests that businesses, faced with higher borrowing costs, have slowed hiring and stepped up layoffs this year.

Weekly claims, which hovered in the 325,000 range late last year, have risen steadily this year, reaching a recent peak of 396,000 in mid-June. Meanwhile, the government's separate employment report showed average monthly job growth of only 114,000 during the first five months of the year.

In May, the economy loss a net of 101,000 jobs, the most since April 1991, although the unemployment rate fell to 5.7 percent from 5.8 percent the previous month.

"On the basis of the May numbers, there does seem to be a little bit of a downshift in the economy in terms of jobs," although other economic reports show a possible rebound, said U.S. Secretary of Labor Robert Reich in an interview. "It's very hard to discern a real pattern."

Analysts said the outlook for jobs could pick up in the next few months as lower mortgage rates pull consumers into the market for housing, boosting demand for labor in industries ranging from construction to home appliances.

"We do know from the May figures that there seemed to be a correlation between the sectors losing jobs _ construction, consumer durables _ and those sectors of the economy that are quite sensitive to interest rates," said Reich.

The Labor Department will report on the June employment situation at 8:30 EDT today. Analysts surveyed by Bloomberg Business News said the U.S. economy probably added 101,000 jobs last month, though the unemployment rate likely rose to 5.8 percent from 5.7 percent in May as the labor force expanded.

While weekly jobless claims reports track how many people are filing first-time unemployment claims at state offices, the more comprehensive monthly employment report surveys households and businesses to gauge job creation as well as unemployment.

Separately in Thursday's report, the Labor Department said 18 states or territories reported increased claims in the week ended June 24 while 35 reported decreases.

The department also said that in the week ended June 24, the total number of people on the unemployment rolls rose by 79,000 to 2.707 million, while the insured unemployment rate rose to 2.5 percent from 2.4 percent in the previous week. These figures, like state details, are reported with a two-week lag.

The insured unemployment rate measures the number of people collecting unemployment benefits divided by the number of employed workers covered by the program.

Copyright 1995
Provided by ProQuest Information and Learning Company. All rights Reserved.