1 April 2004, 12:34  U.S. Jobless Claims Seen Rising; Manufacturing Growth May Slow

The number of Americans filing initial claims for jobless benefits may have risen last week and manufacturing growth may have slowed in March, economists said in advance of reports being issued today in Washington. States received 340,000 new requests for assistance in the week that ended March 27, up from 339,000, according to the median of 37 estimates in a Bloomberg News survey. The Labor Department issues its report at 8:30 a.m. Claims fell to a three- year low of 338,000 in the week that ended March 12.
A reading of 59.5 is expected in the Institute for Supply Management's factory index for last month, according to the median of forecasts. It would compare with 61.4 the previous month, and a January reading of 63.6 that was the highest since December 1983. The report is set for 10 a.m. All numbers higher than 50 indicate growth. ``There is a bit of a pullback in manufacturing, but it's not going down to a level that would suggest serious weakness,'' Christopher Rupkey, a senior financial economist at Bank of Tokyo- Mitsubishi Ltd. in New York, said. Companies have stretched their workforces to keep up with increases in demand, with an average of 61,000 people hired in each of the past six months, after the loss of 1.1 million jobs since an eight-month recession ended in November 2001. The economy created an average of 197,000 jobs a month during the record 1991-2001 expansion. ``Signs of strain, such as lengthening delivery times in some manufacturing reports, indicate that firms are having difficulty meeting demand with present levels of labor and capital,'' Mickey Levy, chief economist at Bank of America Corp. in New York, said.
Producer Prices
The Labor Department may report the producer price index for February increased 0.3 percent after rising 0.6 percent, according to the median of forecasts. The index excluding food and energy may have increased 0.1 percent in February after rising 0.3 percent in January, economists said. The report is scheduled for 8:30 a.m. in Washington. The statistics, originally scheduled for release March 12, were delayed because of ``unexpected difficulties'' in converting them to a new classification system, the government said. The Commerce Department may report that construction spending was unchanged in February after falling 0.3 percent in January, according to the median of forecasts. That would be the second consecutive month without an increase. The report is set for 10 a.m. in Washington. The labor market has become a central issue in president George W. Bush's re-election campaign, with Democratic presidential candidate John F. Kerry saying the administration has done too little to help create new jobs. The administration says job growth is starting to pick up.
Job Projections
On Friday, the Labor Department may report that payrolls rose by 120,000 in March after an increase of 21,000 in February, based on the median estimate of economists surveyed. So far, companies have been able to meet rising demand through gains in productivity, or the amount of goods and services produced by each employee in an hour. Productivity grew 4.4 percent last year and 5 percent in 2002, the first back-to- back increases exceeding 4 percent since record-keeping began in 1947. ``The single most important factor explaining lagging job creation is the astonishing gains in labor productivity that have been achieved in the U.S. economy in the past few years,'' Federal Reserve Governor Ben S. Bernanke, said in a speech Tuesday at the Fuqua School of Business at Duke University in Durham, North Carolina.
Bernanke is among economists who expect hiring to accelerate as companies run out of places to cut costs. Businesses may have started to have trouble keeping up with orders. Reports last month from the Fed Banks of New York and Philadelphia showed gains in delivery times. ``We've seen our lead times increase in terms of how long it takes semiconductor vendors to supply us, which means inventories are in somewhat short supply,'' Errol Ginsberg, president and chief executive of Ixia, a Calabasas, California, maker of network-testing equipment, said in an interview Tuesday. ///www.bloomberg.com

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