The number of Americans filing initial jobless claims fell to 336,000 last week as rising demand prompted companies to retain workers, a government report showed. First-time applications for unemployment benefits fell by 15,000 in a week curtailed by the national day of mourning for former President Ronald Reagan, from a revised 351,000 the previous week, the Labor Department said in Washington. The four- week moving average of claims, a less volatile measure, fell to 343,250 from 346,000. The average number of weekly claims this year has fallen to 346,917 from about 402,000 last year as rising sales and profits have given companies confidence to boost hiring. The U.S. economy added 1.2 million jobs in the first five months of 2004 and those gains are likely to be sustained, economists said.
``We're in the early stages of a long expansion,'' said Douglas Lee, president of Economics From Washington, a research firm in Potomac, Maryland, before the report. Economists had expected the number of claims reported today to fall to 340,000 from the 352,000 initially reported last week, according to the median forecast in a Bloomberg News survey. The 39 estimates ranged from 330,000 to 355,000. This is the second consecutive jobless claims report covering a week in which federal offices were closed for a day. A portion of last week's decline can be attributed to the closing last Friday of state offices for the day of mourning, a Labor Department spokesman said.
Continuing Claims
The number of people continuing to collect state jobless benefits rose by 31,000 to 2.895 million in the week that ended June 5 from a revised 2.864 million a week earlier. The statistics are reported with a one-week lag to initial claims. The four-week moving average for continuing claims fell to 2.921 million from 2.930 million. ``The proper claims level has reasserted itself,'' said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York. ``We're in the middle of a red hot labor market.'' Initial claims is one of 10 data points that comprise the Conference Board's index of leading indicators. Claims of between 380,000 to 400,000 are considered the dividing line between workforce growth and contraction, economists said.
Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, said the level of the four-week moving average of claims is indicative of a strengthening economy moving through the normal contraction-growth cycle. Jobless claims start out high during a recession, diminish as the economy moves into a rapid growth rate and then stabilize at that diminished level until the next slowdown, he said.
No Slowdown
``We don't see any evidence of slowing,'' Englund said. ``And we don't look for an uptrend in claims, with the exception of the week-to-week gyrations that we normally see.'' The insured unemployment rate, which tends to move with the jobless rate, was unchanged at 2.3 percent in the week ended June 5. Twenty-eight states and territories during that week reported a decrease in new claims, while 25 had an increase. The U.S. added almost a quarter of a million jobs in May and 346,000 in April, according to the Labor Department. The workforce now stands at 131.2 million and is on a pace that will recoup all jobs lost since the start of the recession in 2001, if it's sustained through November. Investors are watching claims to gauge the impact from annual factory shutdowns for auto retooling, which typically occurs between June and August. Automakers idle assembly workers each year while they re-equip factories to build new models.
Re-Tooling
As of Monday, General Motors Corp., the world's biggest carmaker, had closed a Doraville, Georgia, factory employing 2,000 people; a Linden, New Jersey, plant employing 1,200; and a Moraine, Ohio, plant with 3,500 workers. Manufacturers in the U.S. ended 42 months of job losses in February, adding 7,000 positions, according to revised Labor figures released this month. That was followed by gains in March and April. In May, U.S. factories added 32,000 jobs, the biggest gain since August 1998. Agco Corp., the world's third-biggest maker of farm machinery, will likely expand its 14,000-person workforce by 10 percent over the next year to meet rising demand, according to Chairman Robert Ratliff. Hewlett-Packard Co., the world's No. 2 computer maker, may add 5,000 workers over the next 12 months.
Still, other companies are cutting jobs to save money.
Sprint Corp., the third-largest U.S. long-distance telephone carrier, said this week the company will cut as many as 1,100 jobs from a unit that sells phone service to businesses because of a decline in calling prices. ///www.bloomberg.com