|
Home Page
US jobless claims drop to three-year low
WASHINGTON (AFP) March 18- The ranks of America's newly
unemployed shrank to a three-year low last week as employers spared
the jobs axe, government data showed.
New hiring was now the missing ingredient for a recovery in the
labor market, a battleground in the runup to November 2 presidential
elections, analysts said.
The number of people lodging new claims at unemployment benefit
offices in the week ending March 13 slid 6,000 to a seasonally adjusted
336,000, the smallest number since January 13, 2001.
"It is moving in the right direction, downwards, indicating
that we are seeing a reduced pace of layoffs in the US economy,"
said BMO Financial Group senior economist Sal Guatieri.
"That is the good news. The bad news is we have yet to see
any increase in the pace of hiring and that is because American
businesses are still focussed on raising efficiencies and organizing
their operations around information technology."
US president George W. Bush's administration, under fire from Democratic
presidential hopeful John Kerry (news - web sites) over the sluggish
rate of jobs growth, touted the latest figures.
"The rising economic tide is starting to lift Americans seeking
work," said Commerce Secretary Donald Evans.
"The continuing decline in jobless claims shows that our gathering
economic momentum is reaching more and more Americans," he
said.
A barometer of future US economic activity, the leading index compiled
by the Conference Board (news - web sites), was flat in February
after a 0.4-percent increase in January, the business research group
said.
"Sustained consumption and strong investment should start to
induce stronger job growth," said Conference Board economist
Ken Goldstein.
"What is unusual about the current business cycle, however,
is the delay between the strengthening economy and the hiring of
new workers. But the labor market should start to improve, barring
a major disruption in the economy."
A four-week average of new claims for unemployment benefits fell
2,000 from the previous week to 344,000, the Labor Department (news
- web sites) report showed, down about 60,000 in the past six months.
Historically, the level of new unemployment benefit claims was consistent
with a jobs growth of 140,000 a month or more, Guatieri said.
"But there seems to be a structural break going on here and
companies are just reluctant to hire because they are so focussed
on boosting productivity," he said.
The economy churned out a meager 21,000 jobs in February, government
data showed, meaning the nation has gone through a record 44 months
without a single month of job creation exceeding 250,000.
The unemployment rate was stuck at 5.6 percent.
US Federal Reserve (news - web sites) policymakers noted the lack
of hiring when they froze short-term interest rates at a 1958 low
on Tuesday in a bid to jolt the economy out of the jobs rut.
"Although job losses have slowed, new hiring has lagged,"
committee members said after a one-day meeting.
Federal Reserve chairman Alan Greenspan (news - web sites) and
his colleagues voted unanimously to maintain the federal funds rate,
which banks charge each other overnight, at a 46-year low of 1.00
percent.
Ironically, the low interest rates may be impeding hiring, Guatieri
said.
"In a perverse sense, what is happening is the low interest
rate environment is keeping the cost of capital equipment investment
very low," he said.
"It is almost a no-brainer for a company to spend money on
capital equipment as opposed to an additional worker."
Eventually, productivity would rise to the point where companies
would be encouraged to hire more people, Guatieri said.
"But we have not seen that yet."
Continue With:
03-18-04
Consumer debt loads at record
03-18-04
U.S. mortgage market mixed as prepay worries brew
03-18-04
Oil Prices Add to Wall Street Negativity
03-18-04
One-third of US investors would trade on illegal tip
03-18-04
Reports Offer Signs of Hope on Jobs Front
03-18-04
Stocks Off on Inflation, Security Fears
03-18-04
U.S. 30-Year Mortgage Rates
03-18-04
U.S. Leading Indicators Flat in February
03-18-04
Wall Street Set for Cautious Start
Mortgage
News
| 
