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U.S. Jobless Figures Get New Scrutiny

October 06, 2003|From Bloomberg News and Associated Press

Economists have lately shifted their focus to jobs as the barometer of recovery.

From July through September, the economy lost 41,000 jobs as claims for jobless benefits averaged 405,000 a week.

Last week, however, economists saw a glimmer of hope when the Labor Department reported an unexpected gain of 57,000 jobs in September, the first increase in eight months, and the unemployment rate held at 6.1%.

The Labor Department will report weekly jobless claims Thursday.

The economy needs to consistently add at least 100,000 jobs a month to bring down the unemployment rate, economists maintain, but such gains may be a few months away.

"The jobless claims figures are consistent with a very small increase in net hiring" in October, said Drew Matus, a senior economist at Lehman Bros. Inc. in New York. The labor market "is likely to remain tepid for some time, although there are signs of a budding recovery."

The demand for workers could pick up if the economy gains momentum. Economists surveyed by Bloomberg News estimated that the nation's economy probably expanded at a 4.5% annual pace in the third quarter, compared with a 3.3% rate in the previous three months. The survey median projects a 4% pace of growth for the last three months of the year.

"Weakness in the labor market and difficulties in nation-building in Iraq have caused President Bush's popularity ratings to fall sharply," said William Dudley, chief U.S. economist at Goldman, Sachs & Co. in New York.

Stiff global competition and excess capacity prevent companies from raising prices, prompting them to curb costs instead to bolster profits.

An inability to raise prices has "caused companies to be overly aggressive on cost cutting," said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York-based forecasting firm. "Companies don't want to hire unless their backs are absolutely pushed to the wall."

Meanwhile, imports are getting cheaper, which could cause the trade deficit to widen. In March, the deficit reached a record $43 billion. The Commerce Department is due to release the report Friday.

Here's a summary of key business events and reports due out this week:

Tuesday: The Federal Reserve releases figures on consumer borrowing in August.

Wednesday: The Federal Reserve issues the first colorized U.S. money -- $20 bills with splashes of peach, blue and yellow.

Thursday: The Labor Department reports weekly jobless claims; Freddie Mac reports mortgage rates; retailers announce sales for September.

Friday: The Commerce Department posts total U.S. imports for August; the Labor Department reports on the producer price index for September.

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