Washington, Feb. 27 (Bloomberg) -- The number of U.S. workers filing new claims for unemployment benefits unexpectedly rose to the highest level this year as more companies fired employees amid slow economic growth and concerns about a possible Iraq war. States received 417,000 applications for jobless benefits in the week that ended Saturday, up from a revised 406,000 the week before, the Labor Department said. The four-week moving average of claims, a less-volatile indicator, rose to 399,750 from 394,750, the highest since the first week of January. ``We are looking at significant weakening in the labor markets,'' said Joseph Abate, a senior economist with Lehman Brothers Inc. in New York, before the report. ``We need faster economic growth to fix the labor market's weakness, and to get that consumers and businesses need to start spending more.'' The second straight increase suggests that U.S. labor markets have weakened since the unemployment rate dropped to a four-month low of 5.7 percent in January. Testing-equipment maker Agilent Technologies Inc., grocery distributor Fleming Cos. and aluminum- can maker Ball Corp. are among the companies that within the past two weeks have said they would fire workers.
Economists had forecast a decline to 390,000 new claims from the 402,000 originally reported for the previous week, based on the median estimate of 36 economists in a Bloomberg News survey. This week's claims were the highest since 438,000 in the week ended Dec. 14. ``We won't have evidence that the layoffs are slowing until jobless claims fall to the 375,000 range and lower -- that's a ways off,'' said Rudolph Thunberg, an economist at Ried, Thunberg & Co. in Westport, Connecticut, whose forecast of 410,000 claims was the highest in the Bloomberg survey. ``Geopolitical tensions, rising oil prices and the threat of terrorism are making both consumers and businesses conservative in their spending.''
Continuing Claims
The number of people continuing to collect state jobless benefits fell by 45,000 to 3.377 million in the week ended Feb. 15 from a revised 3.422 million the previous week, the report said. Ten states and territories reported an increase in new claims during the week ended Feb. 15, while 43 recorded a decrease. The insured unemployment rate, which tends to track the U.S. jobless rate, was unchanged at 2.7 percent.
Some companies continue to cut jobs, citing lackluster demand from consumers or business clients. Agilent, whose products are used to test computer chips and drugs, said last week it will cut 4,000 jobs. Ball Corp., which makes cans for Coors beer and Coca- Cola soft drinks, plans to close an Arkansas food-can plant with 48 workers. Fleming, the largest U.S. grocery distributor, said it will fire 1,800 employees after losing a Kmart Corp. contract. Poor job prospects and concern about a potential war have been weighing on consumers, especially those who want new jobs. The Conference Board consumer confidence index fell to nine-year low of 64 in February from 78.8, the biggest drop since the Sept. 11 terrorist attacks. The percentage of consumers seeing jobs as ``hard to get'' rose to 30.1 from 28.9 in January, the portion who saw jobs as ``plentiful'' fell to 11.2 percent from 14.5 percent. The economy may expand 2.7 percent this year after expanding 2.4 percent in 2002, according to the latest Blue Chip Indicators Survey of business economists. The forecasters expect unemployment to average 6 percent this year. //www.quote.bloomberg.com