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Reports Offer Signs of Hope on Jobs Front
By SETH SUTEL, AP Business Writer
NEW YORK - A pair of economic reports released Thursday
signaled hope that the long dry spell in hiring could be easing,
but economists remained cautious about the prospects of a full recovery
in the job market. Another report showed a spike in energy prices.
The Labor Department (news - web sites) reported Thursday that the
number of new claims for unemployment benefits fell last week for
the third consecutive week, driving jobless claims down to their
lowest level in more than three years.
The number of laid-off workers seeking jobless benefits fell by
6,000 to 336,000, indicating that the pace of job cuts is slowing.
Economists have been hoping that that trend will indicate more hiring
in the future, but so far that has yet to pan out.
David Wyss, chief economist for Standard & Poors, called the
report encouraging but stopped short of saying that the job market
was on the mend. "People aren't getting laid off, but they
also aren't getting hired," he said.
Separately, a private research group in New York called the Conference
Board (news - web sites) reported that its forward-looking barometer
of economic activity held steady in February, and that an indicator
of current economic activity rose.
Taken together, the reports suggest that the current growth in the
economy will lead to job creation quite soon, perhaps in the next
month or two, according to Ken Goldstein, an economist at the Conference
Board.
The group's Composite Index of Leading Economic Indicators (news
- web sites), a forecast of economic activity over the next three
to six months, held steady from January at 115.1 following a gain
of 0.4 percent in January.
Economists were somewhat disappointed in the flat reading since
it followed 10 consecutive months of gains in the index, a feat
that has happened only two other times in the last 30 years, Goldstein
said.
The group also reported that its coincident index, a snapshot of
the current state of the economy, rose by 0.3 percent in February,
following a downwardly revised 0.1 percent gain in each of the prior
two months.
Under normal circumstances, the signs of growth seen so far in the
economy would have already led to job growth, Goldstein said. The
lag between recovery in the economy and a corresponding improvement
in employment has been "longer than we're used to," Goldstein
said.
He said the consistent strength in the leading indicators index
is consistent with continued economic growth of about 5 percent.
"The leading indicators tell us that we're not losing momentum,"
Goldstein said. "It's hard to see how we can keep that up without
job growth."
The leading indicators index combines 10 various measures of economic
activity, including money supply, manufacturing hours and new orders
for consumer goods and materials. The Conference Board reported
that six of those 10 measurements increased in February.
Hugh Johnson, the chief economist at First Albany Capital Inc. called
the unemployment data "encouraging," but he remained cautious
about prospects for increased hiring.
"You have to be encouraged by the trend in jobless claims,
but you have to recognize that that doesn't necessarily mean that
the job market is improving," Johnson said. However, he remained
hopeful that the slowdown in layoffs thus far in March could suggest
a long-delayed showing of job growth for this month.
The prolonged weakness in the job market has already become a major
political issue, with Democrats attacking President Bush (news -
web sites) for his record on promoting job creation.
Just 21,000 new jobs were created in February, according to the
Labor Department's survey of payrolls, as the country's job machine
continued to sputter far below expectations.
In a separate report Thursday, the Labor Department said that inflation
at the wholesale level jumped by 0.6 percent in January, marking
the largest rise in three months. The increase reflected a big jump
in energy prices.
Wholesale prices rose 0.6 percent in January, reflecting in part
the largest jump in energy prices since last March at the start
of the Iraq (news - web sites) war. Outside of the volatile food
and energy categories, the Producer Price Index (news - web sites)
rose a more moderate 0.3 percent.
The inflation report was delayed by more than a month due to a
technical glitch.
The reports got a generally cool reception on Wall Street, where
investors were particularly concerned about the continued rise in
energy prices. The Dow Jones industrial adverage stumbled during
the day but later recouped some of its losses, closing down 4.52
points at 10,295.78.
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