The number of Americans filing initial claims for unemployment benefits last week fell to 345,000, close to a three-year low, a government report showed. First-time claims dropped by 7,000 in the week that ended Saturday from 352,000 a week earlier, the Labor Department said in Washington. In the last week of December and during the week ended Jan. 24, claims reached 339,000, the lowest since January 2001. Jobless claims have dropped to a weekly average of 350,000 this year from 403,000 in 2003 as businesses hold on to more workers to meet demand. Industry surveys show more manufacturers planning to add workers, suggesting job growth that's lagged since the recovery began in November 2001 may be strengthening as businesses gain more confidence and boost spending. ``We are seeing some hiring, but it's extremely anemic thus far,'' said Richard DeKaser, chief economist at National City Corp. in Cleveland. ``On the other hand it's a sharp contrast to the job cuts we saw steadily for a three-year period.''
Gains in productivity, or how much is produced for each hour worked, have allowed companies to meet demand without hiring. For all of last year, productivity rose 4.4 percent following a 5 percent gain in 2002, Labor Department figures showed today. The increases are the first to exceed 4 percent back-to-back since record-keeping began in 1947. Productivity has outpaced economic growth for the last three years, also the longest stretch ever. The first quarterly payrolls increase in almost three years and more hours worked suggest companies may not be able to rely solely on efficiency gains to meet demand.
Productivity
Worker productivity grew in the fourth quarter at a 2.6 percent annual rate after rising at a 9.5 percent annual rate in the third quarter. ``We expect productivity growth to cool to 2 percent or so, enough to encourage employers finally to lengthen the workweek and expand headcount,'' said Joseph Abate, a senior economist at Lehman Brothers Inc. in New York. An estimated 130,000 jobs were probably added in February, more than at any time since late 2000, according to a separate Bloomberg survey ahead of tomorrow's employment report. The economy has generated an average of 73,000 jobs in the past five months, compared with 197,000 a month during the record 10-year expansion that ended in March 2001.
Continuing Claims
Economists had forecast claims would fall to 345,000, based on the median forecast in a Bloomberg News survey, from the 350,000 initially reported for the week earlier. Estimates ranged from 335,000 to 355,000. The four-week average of claims, a less-volatile indicator, fell to 352,250 from 355,250. The number of people continuing to collect state jobless benefits held at 3.091 million in the week that ended Feb. 21. The four-week average dropped to 3.107 million from 3.110 million. The insured employment rate, which tends to track the U.S. jobless rate, held at 2.4 percent in the week ended Feb. 21. The Labor Department also said 14 states and territories reported an increase in new claims that week, while 39 reported a decline. These data are reported with a one-week lag. The Institute for Supply Management's index of factory employment in February rose to the highest since December 1987, indicating more manufacturers are hiring than firing.
Growth Forecast
Gross domestic product will expand 4.6 percent this year, the most since 7.2 percent in 1984, according to the median forecast of 61 economists in a Bloomberg News survey taken Jan. 30 to Feb. 6. Union Pacific Corp., owner of the biggest U.S. railroad, said it's hiring 3,500 workers because of crew shortages. About half of the new employees will replace ones who recently resigned or retired. The Omaha, Nebraska-based company said it underestimated the number of workers who would take advantage of new rules allowing earlier retirement, forcing it to hire after the shortfall cost the company about $50 million, including missed shipments, in last year's second half. ``We are hiring people like crazy,'' Chief Executive Richard Davidson said on a conference call Monday. ``We are going to fix the employee shortfall.'' Santa Clara, California-based Applied Materials Inc., the world's biggest maker of computer-chip production equipment, may add about 500 manufacturing jobs this year to help fill increasing orders from chipmakers. The company may add staff at its factories in Texas, Chief Financial Officer Joe Bronson told a Morgan Stanley semiconductor conference in Dana Point, California, on Monday. ///www.bloomberg.om