18 October 2002, 09:07  U.S. Jobless Claims Rise 22,000 to 411,000 Last Week

/www.bloomberg.com/ By Siobhan Hughes
Washington, Oct. 17 (Bloomberg) -- The number of U.S. workers filing new claims for state unemployment benefits rose last week as companies used job cuts to boost profits amid a lackluster economic recovery.
Initial jobless claims increased to 411,000 in the week that ended Saturday from 389,000 the prior week, the Labor Department said. The rise of 22,000 pushed the claims level above the 400,000 mark that economists say is the dividing line between an improving and a deteriorating labor market.
Lucent Technologies Inc. and J.P. Morgan Chase & Co. in the past week have joined the list of companies announcing job cuts, which may push the jobless rate above the 5.6 percent of September. Moreover, the total number of people collecting benefits surged by 141,000 to 3.755 million in the first week of October, signaling that laid-off workers may still be struggling to find new jobs.
``There still appears to be quite a bit of uncertainty on the part of businesses about their outlook, and that makes them reluctant to add more workers,'' said Ryan Brecht, an economist at MMS International in Belmont, California.
A separate report from the Federal Reserve showed that industrial production fell 0.1 percent in September, a second straight decline, led by a drop in assemblies of motor vehicles, appliances, communications equipment. Builders broke ground on new homes last month at the fastest pace since June 1986, the Commerce Department reported.
Weekly Jobless Rate
Economists had expected claims to rise to 399,000 from a level of 384,000 originally reported for the week before last, based on the median of 30 forecasts in a Bloomberg News survey. The four-week moving average of claims, a less-volatile indicator, declined to 408,750 from 413,500.
September's decline in the unemployment rate was the second in a row and surprised economists, who say the higher level of claims should mean a rise in the overall jobless rate.
The weekly insured unemployment rate, which is derived from jobless claims statistics, tends to track changes in the monthly unemployment figures. It rose to 2.9 percent in the week that ended Oct. 5 from 2.8 percent the week before and is up from 2.7 percent in the second week of August. The weekly insured jobless rate is now the highest since mid-June.
Over 30 years, the monthly and weekly jobless rates have risen and fallen together about 80 percent of the time, according to Gerald Cohen, a senior economist at Merrill Lynch & Co. in New York.
Firings
On Wednesday, J.P. Morgan said it would cut more than 2,000 investment banking jobs after failing to boost profit in seven of the past eight quarters. Lucent, the biggest U.S. maker of telephone equipment, said last week it would eliminate 10,000 positions to reduce costs and help stave off insolvency. Repeated spending cuts by Lucent's customers spurred the firings.
Companies are also following through on job cuts announced months earlier. Intel Corp. has eliminated 1,500 positions of the 4,000 cuts announced in July, Chief Financial Officer Andy Bryant said in an interview Wednesday. The rest will be completed this quarter.
``What we continue to do is try to look at every cost element and control it,'' Bryant said. Intel, the world's biggest chipmaker, reported on Wednesday that sales would fall this quarter because businesses aren't replacing personal computers as quickly as expected.
Hiring Plans
At the same time, companies have few plans to hire new workers. The jump in the number of people continuing to collect state jobless benefits was the largest since a 155,000 surge in November 1995. Continuing claims reached a 19-year high of 3.83 million in the first week of May.
Claims have averaged 407,000 so far this year, up from 406,000 last year and the most since 409,000 in 1992, when the U.S. was recovering from the 1990-91 recession. Still, the labor force has expanded by more than 10 percent since then, which explains why unemployment remains below the peak of 7.8 percent seen after that recession.
The Labor Department also said 45 states and territories reported a increase in new claims during the week that ended Oct. 5, while seven states and territories reported a decrease.
Figures on continuing jobless claims, the insured unemployment rate and state-by-state changes are reported with a one-week lag to initial claims.

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