8 July 2004, 10:52  U.S. Jobless Claims Seen at 341,000 Last Week, Survey Shows

The number of Americans filing initial applications for unemployment insurance may have fallen last week, economists said ahead of a government report today. The Labor Department is expected to say new jobless claims declined to 341,000 from 351,000 the previous week, based on the median forecast of 44 economists in a Bloomberg survey. Weekly claims have averaged 347,000 this year, compared with 402,000 in 2003. The report is scheduled for release at 8:30 a.m. in Washington. Hiring has picked up this year as companies have tried to catch up with rising demand. Economists said more job growth is needed to support consumer spending, which gave signs of slowing last month. The U.S. added 112,000 jobs in June, less than half the previous month's total, the Labor Department said Friday. ``Job growth is vastly improved, but it remains a bit shy of vigorous,'' Michael J. Moran, chief economist at Daiwa Securities America Inc. in New York, said in an interview.
The Federal Reserve may report consumer borrowing through credit cards, auto loans and other personal loans increased by $7.5 billion in May after rising by $3.9 billion during April, according to the median of forecasts. The report is scheduled for release at 3 p.m. in Washington. Initial applications for unemployment benefits have risen in five of eight weeks since dropping to a three-and-a-half-year low of 318,000 in the week that ended April 30. Recent figures, including Friday's June payrolls report, suggest a halting improvement after hiring surged in March through May.
Job Cuts
U.S. employers announced plans in June to cut 64,343 jobs, a 7.8 percent increase from the year-earlier month, led by dismissals at financial-services and telecommunications companies, according to a survey compiled by Challenger, Gray & Christmas Inc., a Chicago-based placement firm. Last month's total was the lowest since June 2003 and was 12 percent lower than the 73,368 announced in May, Challenger said. The figures aren't adjusted for seasonal variations, making month-to-month comparisons difficult. Delta Air Lines Inc., the third-largest U.S. carrier, is seeking more cost cuts and will present a restructuring plan to its board in late August, Chief Executive Gerald Grinstein told employees last week. Cars and light trucks sold at an annual rate of 15.4 million in June, down from 17.8 million in May, according to industry data adjusted by the Commerce Department. The figures for auto sales may show that consumer spending, an engine of growth the past several quarters, is cooling, economists said. Some financial companies, including UBS Securities LLC and J.P. Morgan Securities Inc., trimmed their second-quarter growth forecasts last week after the report.
`Much Stronger'
Still, the U.S. has created 1.3 million jobs so far this year, the biggest six-month gain since December 1999-May 2000, and economists expect further gains in coming months. The U.S. lost an average of 5,000 jobs a month last year. ``The economy seems clearly to be in a much stronger position than it was a year ago or even at the beginning of this year,'' J. Alfred Broaddus Jr., president of the Federal Reserve Bank of Richmond, said this week. The expansion is ``solid and supported by strong growth in household income,'' he said. Broaddus made his comments Tuesday at a conference sponsored by the Southeastern Association of Tax Administrators in Asheville, North Carolina. The Fed raised its interest rate target for overnight loans between banks by a quarter percentage point to 1.25 percent June 30 to head off inflation. The increase was first since May 2000.
Profit Outlook
Rising profits make it easier for companies to add workers. A higher percentage of U.S. companies saw profit margins widen in the quarter that ended June 30, according to a survey by the National Association for Business Economics. Forty-one percent of the 104 companies responding said they plan to increase hiring in the next six months, up from 34 percent in April, the quarterly survey found. ``By almost any measure -- output, employment, profit margins, capital spending -- this economy is strong,'' said Duncan Meldrum, association president and chief economist at Air Products and Chemicals Inc., of Allentown, Pennsylvania. Economists including Robert Mellman at J.P. Morgan said jobless-claims data are generally more difficult to interpret in July because automakers shut plants to retool for new models. Autoworkers not eligible for vacation pay may apply for unemployment benefits. Last week, General Motors Corp. was scheduled to close its plant in Orion Township, Michigan, which employs 1,500, and Ford Motor Co. planned to shut a Chicago plant with 2,213 workers. ///www.bloomberg.com

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