Unemployment claims up this week

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Unemployment claims jump by 20,000 last week

By MARTIN CRUTSINGER
Associated Press

WASHINGTON -- The number of Americans filing new claims for unemployment benefits rose last week by 20,000, the largest jump in a month, the Labor Department reported Thursday.

The bigger-than-expected increase pushed total new claims to 350,000 last week and provided fresh evidence that the labor market is still under pressure even though the economic recovery is about to celebrate its third anniversary.

The increase of 20,000 was sharply higher than the 6,000 gain that many private economists had been expecting and was the biggest one-week rise since a jump of 21,000 claims in the week of Sept. 25.

The four-week moving average for claims, which is intended to smooth out some of the volatility from the week-to-week changes, fell slightly to 343,250 last week, down from 348,750 the previous week. It was the lowest level for the four-week moving average since mid-September.

Labor Department analysts said the increase in the number of new claims is still being inflated by hurricane-related lay offs in Florida although this impact has been declining in recent weeks. Claims have been unusually volatile during this period.

Private economists noted that claims had fallen by 25,000 the previous week and suggested that averaging the two weeks together would supply a more accurate picture of where the labor market is at the current time.

Ian Shepherdson, chief economist at High Frequency Economics, said that he believed that the average level of claims over the past two weeks was consistent with job growth of around 160,000 per month.

"If sustained, payroll gains of that size, which would be an improvement on recent months, would keep the unemployment rate broadly stable," he said. "There certainly seems little near-term prospects of a significant improvement in the unemployment picture and it could even deteriorate if oil slows consumption."

Wall Street took a breather Thursday after two days of big gains. In early afternoon trading, the Dow Jones industrial average was up 2.86 points.

The health of the economy has been a major debating point in the presidential campaign with President Bush contending that his tax cuts have helped the economy to recover from the 2001 recession while challenger Sen. John Kerry contends that the tax cuts went overwhelmingly to the wealthy and did little to spur economic growth.

While Bush has pointed to job growth over the past 13 months, Kerry counters that it has not been enough to make up for all of the jobs lost since the beginning of the recession. There are 821,000 fewer people on payrolls than when Bush took office in January 2001.

After a spurt of hiring in the spring, job growth weakened in the summer as the economy moved through what Federal Reserve Chairman Alan Greenspan has termed a "soft patch" caused by the sharp spike in energy prices this year.

For September, the unemployment rate held steady at 5.4 percent, but businesses added just 98,000 new jobs, far below what analysts had been expecting.

Economic growth slowed to an annual rate of 3.3 percent in the April-June quarter after suring at an annual rate of 4.5 percent in the first three months of the year. The government will provide the first look at growth in the July-September quarter on Friday. Many economists are predicting the gross domestic product expanded at a faster rate above 4 percent during the third quarter.

The Federal Reserve on Wednesday released its latest survey of business conditions around the country, saying that the economy continued to expand in September and early October despite the string of hurricanes that hit southern states and the sharp rise in oil prices that pushed crude oil to record levels.

Many analysts believe Fed policy-makers, when they next meet on Nov. 10, will decide to nudge interest rates up by another quarter-point in an effort to make sure that a rebounding economy does not trigger unwanted inflationary pressures.

The report Thursday on jobless claims showed that the number of people continuing to collect unemployment benefits rose by 38,000 to 2.82 million for the week ending Oct. 16, the most recent period for which information is available.

[taken from: Billings Gazette]

[Bill Spillz]

Don't you love how Bush's tax cuts are creating jobs - like he claims