The number of Americans filing first- time jobless claims fell last week to the lowest since President George W. Bush took office and prices paid to producers rose in January, signs that companies are keeping workers and buying more raw materials in a growing U.S. economy. ``These are early signals of a global revival,'' said James Glassman, a senior economist at J.P. Morgan Securities Inc. in New York. ``The layoffs stop, you get some pricing power in commodities, and then people start realizing that the recovery is here for good.'' Initial claims for unemployment benefits fell to 336,000, the lowest since the week ended Jan. 13, 2001, the Labor Department said in Washington. More than three-quarters of manufacturers in the Philadelphia region said they expect to hire in the next six months, according to a Federal Reserve report that showed business expanded for in the area for a 10th month.
The producer price index rose 0.6 percent, led by higher energy costs, after a 0.3 percent increase in December. The Conference Board's index of leading economic indicators was unchanged in February, the weakest reading since March 2003, as slow job creation and higher energy bills chipped away at consumer confidence. The slowdown in firings has yet to translate into higher employment as companies rely on efficiency gains to keep up with demand. Unless the economy adds more than 230,000 jobs a month in for the 10 reports left for 2004, Bush will become the first president since Herbert Hoover to end a term with fewer jobs than when he started. The last time the country added more than 230,000 jobs in a month was May 2000.
Treasury Securities
Fed officials, at their Jan. 27-28 meeting, agreed that productivity gains were impeding employment. While efficiency gains are expected to slow, some central bankers said ``the timing and extent of the improvement in employment were subject to considerable uncertainty,'' minutes of the meeting showed. U.S. Treasury securities fell after producer prices rose and on news that a top aide to terrorist Osama bin Laden was surrounded on the Pakistan-Afghanistan border. In times of crisis, investors often seek the haven of government debt. The benchmark 4 percent Treasury note maturing in February 2014 fell 11/32 point, pushing up its yield 4 basis points to 3.75 percent at 4:55 p.m. in New York. The Fed Bank of Philadelphia's general economic index this month registered a reading of 24.2 compared with 31.4 in February. A number greater than zero signals a higher percentage of the manufacturers surveyed reported an improvement in business than deterioration. The index reached a 10-year high of 38.8 in January and has been positive since June.
Hiring Outlook
In a special question, 73.2 percent of the participants said they've had job openings in the last three months and 89.2 percent said problems filling those positions were due to a lack of ``qualified applicants.'' Almost 77 percent said they anticipate job openings in the next six months. Today's jobless claims figures for the week ended March 13 suggest employment has accelerated this month, because the week coincided with the Labor Department's employment survey period for March. Since the recovery began in November 2001, the largest monthly rise in payrolls was 97,000 in January. The U.S. added 21,000 jobs in February, just a sixth of the median forecast in a Bloomberg News survey. ``March's employment report could show the strongest payroll gain thus far in the recovery,'' said John Ryding, chief economist at Bear Stearns & Co. in New York.
Jobless Claims
First-time claims declined from 342,000 the week before last and have averaged 348,000 this year, down from 403,000 in 2003. The four-week average of claims, a less-volatile indicator, declined by 2,000 to 344,000, the lowest since 336,500 in the week ended Jan. 27, 2001. The number of people continuing to collect state jobless benefits jumped by 47,000 to 3.064 million in the week ended March 6. ``Manufacturing is absolutely picking up,'' said Carol Bartz, chief executive of Autodesk Inc., a maker of software used to plan buildings and factories, in an interview from Mountain View, California. ``We're seeing hiring in that sector.'' A 13-week extension to unemployment benefits that that Congress approved last year runs out the week ending April 3, a Labor Department spokesman said. There were 790,000 people applying for extended benefits as of the end of December, and that number has fallen to 260,000, according to the Labor Department. Most of the 530,000 have used up their benefits without finding a job, the Labor Department said.
Core Inflation
The economy has shed 2.3 million jobs since the beginning of the Bush presidency and lost manufacturing jobs for 43 straight months, points that Democratic presidential candidate John F. Kerry has been making to voters ahead of the November elections. Bush and Treasury Secretary John Snow have predicted faster job growth is coming and called on Congress to make last year's tax cuts permanent to aid the economy. Excluding volatile food and energy, the so-called core rate of producer prices rose 0.3 percent in January, the biggest rise in three months, after a 0.1 percent decrease, the Labor Department said. The report had been delayed for more than a month as the department worked out problems converting data for one set of industry standards to another. Economists had expected a 0.4 percent rise in January producer prices, according to the median estimate of 71 forecasts in a Bloomberg News survey, and a 0.1 percent increase in the core rate. While Americans are paying more for gasoline and other fuels, consumer inflation in the last year is close to the slowest since 1966, a report showed yesterday. Companies are able to hold down prices in part because they're hiring fewer workers. Employment costs account for two-thirds of the price of most goods and services.
Hiring `Has Lagged'
``The ultimate pickup in inflation this year will be muted as labor costs, not commodity costs, are the major driver of retail price inflation,'' said Joseph LaVorgna, an economist at Deutsche Bank Securities in New York. The Fed voted Tuesday to hold down interest rates because core consumer inflation is ``muted'' and ``new hiring has lagged.'' Companies unable to raise prices have been reluctant to increase costs by adding workers. Boise Cascade, the Boise, Idaho- based lumber concern that bought OfficeMax Inc. last year, said this week that it would eliminate about 445 positions at its office-products division as it closes two customer call centers to cut expenses. ``What you are going to see over the next six months is a rebuilding of inventories which is actually going to stabilize manufacturing employment,'' said Robert Gay, head of fixed-income and credit strategy at Commerzbank Capital MarketsCorp. in New York.
Steel and Energy
Some companies including Charlotte, North Carolina-based Nucor Corp., the largest U.S. maker of steel beams, are raising prices. Nucor raised its surcharge on sheet steel by two-thirds March 1 after a jump in scrap-metal and energy costs hurt profit. Hot-rolled steel band, the type used by automakers and appliance manufacturers, has risen to $360 a ton from $280 last year -- before a surcharge that is now adding as much as another $90 a ton, according to Purchasingdata.com. Energy prices jumped 4.7 percent in January after rising 1.6 percent in December. Gasoline prices surged 14.1 percent after gaining 3.4 percent. Passenger car prices climbed 0.6 percent in January, the first rise in three months, after falling 0.1 percent in December. Prices for capital equipment rose 0.3 percent after dropping 0.1 percent the month before.
Crude Goods
Prices for crude goods, which are used at the earliest stage of production, jumped 2.8 percent after increasing 2.2 percent the previous month. Core crude goods prices, excluding food and energy, climbed 3.3 percent after a 3 percent gain the previous month. In the last 12 months, the costs of crude goods were 13.7 percent higher. Intermediate goods prices rose 0.8 percent in January after rising 0.4 percent. Excluding food and energy, intermediate prices rose 0.6 percent after increasing 0.1 percent. The producer prices report was delayed from the originally scheduled Feb. 19 by difficulties in converting statistics to a new classification system, the government said. The Labor Department hasn't set a new date for its February producer price report, originally due March 12, a spokesman said today. ///www.bloomberg.com