22 July 2004, 12:28  U.S. Jobless Claims Seen at 345,000 Last Week, Survey Shows

The number of Americans filing initial jobless claims may have held near this year's average last week, economists said ahead of today's government report. The Labor Department will probably report that applications for unemployment insurance fell to 345,000, the median of 43 economists in a Bloomberg survey, from 349,000 a week earlier. Claims have averaged about 346,000 this year, down from 402,000 in 2003. The report is scheduled for 8:30 a.m. in Washington.
While companies have held on to more workers this year to keep up with growing demand for goods and services, economists are looking for signs that business spending and hiring will accelerate after job growth slowed last month. Federal Reserve Bank of Boston President Cathy Minehan said Monday that disappointing economic data in June was probably temporary. ``Business spending will do pretty well in the second half and hiring should pick up again,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. ``What we saw in June was just at return to more sustainable growth.''
In a separate report, the Conference Board may report U.S. leading of economic indicators, a gauge of possible growth over the next three to six months, showed no change in June after rising 0.5 percent during May, according to the median of economists forecasts. That would be the first month without an increase since February when the index was unchanged. The report is scheduled for 10 a.m. in Washington.
Auto Industry
The range of jobless claims forecasts in the latest Bloomberg survey -- 300,000 to 390,000 -- reflects the annual shutdown of auto plants in July to retool for new models. Autoworkers not eligible for vacation pay are able to apply for unemployment benefits. General Motors Corp. and Ford Motor Co. scheduled all U.S. and Canadian plants for shutdowns last week. The Detroit plant of DaimlerChrysler AG's Chrysler unit was training employees for changeover to the 2005 Jeep Grand Cherokee, and seven other Chrysler plants were closed for model changeovers. The closings this year occurred a week later than in 2003, making it hard for the Labor Department to adjust for the variations, according to economists such as Stephen Stanley. The government uses changes in claims for prior years to determine how much to adjust claims this year. If the shutdowns happen at different times, it causes the figures to be artificially depressed one week and be too high in following weeks. This year, the adjusted figures showed claims dropped to 309,000 in the week ended July 2, the lowest since October 2000, only to jump by 40,000 a week later. Stanley, chief economist at RBS Greenwich Capital Markets in Greenwich, Connecticut, forecasts claims jumped to 390,000 last week to bring the average over the past three weeks back in line.
`Distortions'
``Once distortions abate, we expect that initial unemployment insurance claims will return to the 340,000 to 350,000 range seen since mid-May,'' said Stanley. Economists said hiring may rebound in the second half of the year after June payrolls gained 112,000, or less than half of what economists had expected. Retail and auto sales were disappointing, suggesting economic growth cooled in June, economists said. ``There's been a little bit of a falloff in the June data -- the spending slowdown, and the employment slowdown and the uptick in inflation -- we think all three things are temporary,'' The Fed's Minehan said at a meeting of the New England Community Development Council at the University of Rhode Island. The economy may grow 4.5 percent this year, the fastest since 1999, based on the median estimate of economists in a Bloomberg survey. Business spending to keep up with demand may spur hiring. Maria Fiorini's Shapiro expects average monthly payroll gains of about 200,000 in the second half.
GE, Boeing
General Electric Co., the world's biggest jet-engine maker, is seeing increased demand for new engines, maintenance and spare parts as global economies recover from a three-year slump, David Calhoun, chief executive of GE's transportation unit, said in an interview Monday at the Farnborough, England, Air Show. Boeing Co., the world's second-biggest commercial-aircraft maker, said it will hire 2,000 to 3,000 workers in the Puget Sound area of Washington by the end of this year. At the same time, some companies are still trimming workforces to hold down costs and shore up profit. Peoples Energy Corp., owner of Chicago's natural-gas utility, said it would offer severance packages to about 1,200 employees who resign voluntarily. ///www.bloomberg.com

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