3 January 2003, 10:54  U.S. Initial Jobless Claims Rose to 403,000 Last Week

/www.bloomberg.com/ By Siobhan Hughes
Washington, Jan. 2 (Bloomberg) -- The number of U.S. workers filing new claims for state unemployment benefits rose more than expected during the Christmas holiday week, reflecting a slowdown in the economic recovery.
States received 403,000 initial jobless claims last week, up from a revised 390,000 a week earlier, the Labor Department said.
Companies have cut jobs as businesses control spending, consumer confidence hangs near a nine-year low, and factories become more efficient. The four-week moving average, which smoothes weekly volatility, rose to 418,750, the highest in three months, from 407,500. It was the third straight reading above the 400,000 mark that economists consider a weak labor market.
``You have very little new job creation, which means about the same number of people are finding jobs as losing jobs,'' said Henry Willmore, chief U.S. economist at Barclays Capital Inc. in New York.
Economists had expected claims to rise to 380,000 from a level of 378,000 that was originally reported for the prior week, based on the median of 17 forecasts in a Bloomberg News survey.
Today's report showed the number of people continuing to collect state jobless benefits fell to 3.418 million in the week ended Dec. 21. It was the second straight drop and compares with a 19-year high of 3.83 million in the week that ended May 3. Part of the drop may have come as some recipients exhausted their 26 weeks of benefits without finding new work.
The insured unemployment rate, which tends to track the U.S. jobless rate, held at 2.7 percent in the week that ended Dec. 21. The Labor Department also said that 30 states and territories reported an increase in new claims during the week that ended Dec. 21, while 22 states and territories reported a decrease.
Annual Average Slips
The report completes a year in which claims averaged 405,000, less than the 406,000 in 2001, when the U.S. entered a recession in March. The weakness of the labor market at year's end may suggest a slow economic recovery through the middle of next year.
U.S. growth slowed to about 1.5 percent in the last three months of 2002 from 4 percent in the third quarter, based on average forecasts in a Bloomberg News survey in December. A pickup in consumer and business spending may push growth above 3 percent by this year's second half. The U.S. is recovering from a recession that started in March 2001.
The share of U.S. consumers rating jobs as hard to get jumped in December to 29.8 percent, the highest since May 1994, the Conference Board said Tuesday. The percentage calling jobs plentiful fell to 12.4 percent, the lowest since February 1994.
Companies are still firing workers. This week, Hanover Compressor Co. said it would shed 500 jobs, or 11 percent of its workforce, as the Houston provider of equipment and services for pipelines consolidates some manufacturing plants.
Claims were volatile this month because of a series of holidays that reduced the number of days in which employment offices accepted applications. Tom Stengle, a Labor Department spokesman, attributed the larger than usual revision to the previous week's claims number to a ``slightly compressed time frame for states to report their data.'' Several had submitted estimates for that week, he said.
The price of the U.S. 10-year Treasury security due in November 2012 declined about 5/8 point, pushing the yield up about 7 basis points. The Dow Jones Industrial Average rose 55 points to 8396 at 9:55 a.m. in New York.

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