3 June 2004, 13:01  U.S. Jobless Claims Seen at 335,000 Last Week, Survey Shows

The number of Americans filing for first-time jobless benefits may have declined last week and an index of services, the largest part of the economy, probably held close to a record high last month, according to surveys of economists ahead of two reports today. The Labor Department in Washington will probably report unemployment claims fell to 335,000 from 344,000 the week before, according to the median forecast of 36 economists in a Bloomberg survey. The Institute for Supply Management in Tempe, Arizona, may report its services index slipped to 66 after an all-time high of 68.4 in April. Readings above 50 signal expansion.
Job and income growth may help underpin consumer spending, economists said. Claims fell to 318,000 at the end of April, the lowest in more than three years, and have averaged 347,500 a week so far this year, down from 402,100 in 2003. ``With labor markets now adding jobs on a regular basis, rising incomes will support continued consumption growth without help from tax cuts,'' said Douglas Lee, president of Economics From Washington, a research firm in Potomac, Maryland. The jobless claims report, along with revised Labor Department figures on first-quarter productivity, will be issued at 8:30 a.m. Washington time. The ISM services index will be released around 10 a.m. Washington time, at the same time the Commerce Department releases figures on factory orders.
Productivity Gains
Productivity probably increased at a revised 3.7 percent pace in the first quarter, up from the government's previous growth rate of 3.5 percent, according to the median of estimates. In the fourth quarter, productivity increased at a 2.5 percent annual rate. Factory orders may have fallen 1.4 percent in April after rising 4.3 percent in March, according to the median of forecasts. That would be the first decline in three months. Tomorrow, the Labor Department will issue its May payrolls report. The projected gain of 225,000 jobs, the median in a Bloomberg survey of 70 economists, would make March through May the best three months of job creation since the year 2000. Factories may have added 20,000 workers in May after a gain of 21,000 in April, according to the survey. The U.S. added 288,000 jobs in April on top of 337,000 in March, the biggest two-month increase in four years, the Labor Department reported May 7. El Segundo, California-based DirecTV Group Inc., the biggest U.S. Satellite television service, plans to increase its workforce by as much as 2,000 people when it opens two new call centers in Tulsa, Oklahoma, and Huntsville, Alabama, the next few months, company spokesman Bob Marsocci said.
Pilot Recall?
Fort Worth, Texas-based American Airlines, the world's largest carrier, may recall some of its 2,400 furloughed pilots next year if demand for travel continues to rise. ``At some point next year we may need to recall some furloughed pilots,'' said Tim Wagner, an American spokesman, said Friday. ``There is no firm date. It all very much hinges on continuing growth in the industry.'' The Institute for Supply Management's manufacturing employment index in May rose to its highest since April 1973. The index of supplier deliveries, which measures how long it takes to get materials, jumped to the highest level since 1979. That suggests that employment may continue as companies add workers to help keep up with orders, economists said. ``I expect, going forward the next 12 months, about 175,000 to 185,000 jobs per month, which is pretty robust,'' said Arun Raha, senior economist at Cleveland-based Eaton Corp., the world's second-biggest maker of hydraulic equipment, in an interview.
Growth Quickens
The economy grew at a 4.4 percent annual pace from January through March, faster than previously estimated, as businesses replenished inventories, government spending rose and home construction accelerated, the government said Friday. Economists surveyed by Bloomberg forecast growth of 4.6 percent this year, the fastest in two decades. At the same time, some companies are still cutting jobs to hold down costs and boost profit.
U.S. employers announced plans in May to cut 73,368 jobs, a 6.9 percent increase over the same month a year ago, according to Challenger, Gray & Christmas Inc., a Chicago-based placement firm. Joshua Shapiro at Maria Fiorini Ramirez Inc. said it will be difficult for claims to fall much below recent levels because of the ``sheer size of the labor market and `normal' rates of job attrition.'' Claims have steadily declined in relation to the number of employed since the early 1980s, and may not have to fall as much as in the past in order to correlate with increased hiring, economists said. ///www.bloomberg.com

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