29 January 2004, 09:23  U.S. Jobless Claims Held Close to Three-Year Low, Survey Shows

Jan. 29 (Bloomberg) -- The number of Americans filing initial unemployment claims may have eased to 340,000 last week, close to the lowest in three years, suggesting companies are reluctant to cut staff as the economy strengthens, according to a survey of economists before today's government report. Jobless claims may have declined by 1,000 during the week ended Saturday, based on the median of 40 estimates in a Bloomberg News survey. Filings this month have averaged 346,300, close to the three-year low of 339,000 in the final week of December. The Labor Department reports on jobless claims at 8:30 a.m. in Washington.
Profit gains and increases in demand are encouraging companies to retain workers. In holding the benchmark overnight interest rate at 1 percent yesterday, the Federal reserve said, ``Although new hiring remains subdued, other indicators suggest an improvement in the labor market.'' Software producer Sybase Inc. is among companies already announcing plans to add workers. ``The message of these figures is there is increased hiring,'' said David Sloan, senior economist at 4Cast Ltd., a New York consulting firm. He estimated claims fell last week to 335,000. Forecasts in the survey ranged from 300,000 to 355,000. Higher benefit expenses have pushed companies to rely on productivity gains to meet demand rather than hire. Costs for labor may have risen 0.9 percent in the fourth quarter, based on the median estimate of 54 economists surveyed by Bloomberg News, compared with a 1 percent increase in the third. The Labor Department also releases the employment cost index at 8:30 a.m. today in Washington.
Sybase Hiring
``We are intending to add head counts in kind of a little bit of a more controlled manner,'' said John Chen, chief executive of Sybase, in an interview. Sybase, the seventh-biggest enterprise software maker by stock market value, will increase its workforce ``within five percent'' this year, Chen said. The Dublin, California-based company has about 3,800 employees. Economists including James O'Sullivan at UBS Securities LLC believe the Labor Department may revise up its estimate of 1,000 new jobs in December when it reports on January employment Feb. 6. U.S. payrolls may expand by 180,000 this month, based on the median estimate of 15 economists in a Bloomberg News survey. The Conference Board's measure of consumer confidence rose to 96.8 this month, the highest in a year and a half, as Americans saw signs of economic growth though not job strength. The proportion of people who saw employment as currently easy to get fell 0.2 percentage points to 12.4 percent, and those who said jobs weren't plentiful now rose to 56.2 percent from 55 percent.
Payroll Cuts
Some companies are still reducing payroll. Kraft Foods Inc. said Tuesday it would eliminate 6,000 positions over the next three years and exit or close about 20 plants worldwide. The total represents 6 percent of the biggest U.S. food company's workforce. About 1,300 jobs in North America will be cut this quarter, the company said in a statement. Also Tuesday, Steelcase Inc., the world's biggest maker of office furniture, said it plans to cut 770 jobs, or about 5 percent of its workforce, and to close plants in Indiana and North Carolina after orders dropped. The economy may have grown at a 5 percent annual rate in the fourth quarter, the median of 67 forecasts in a Bloomberg News survey. That would be the second-fastest rate of expansion, behind the third quarter's 8.2 percent, in almost four years. //www.bloomberg.com

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