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Jobless Filings Hint at Recovery

Initial unemployment claims fall to their lowest level in eight months. An index of expected factory activity rises, as does CEOs' confidence.

October 10, 2003|From Reuters

The number of Americans filing initial claims for unemployment aid fell last week to its lowest level in eight months, the government said Thursday, fueling hopes that a job market recovery may finally be at hand.

First-time filings for unemployment benefits fell 23,000 to 382,000 in the week ended Saturday from an upwardly revised 405,000 in the previous week, the Labor Department said.

The drop brought both initial claims and a closely watched four-week average of claims, which smooths weekly volatility to give a better reading on trends, to their lowest levels since early February.

The four-week average fell 11,500 to 393,500, marking its first drop below 400,000 in six weeks. Economists say claims above 400,000 suggest a deteriorating job market, while claims below that signal improvement.

Economists were cautiously optimistic, saying the data -- which followed a report last week showing that U.S. employers added 57,000 workers to their payrolls last month -- suggested a long stretch of job losses could be over.

"What it indicates is that perhaps the labor market is starting to gain some traction," said Jay Bryson, global economist at Wachovia Securities in Charlotte, N.C.

Although the economy emerged from recession in November 2001, it has lost more than 1 million jobs since then. Economists, including officials at the Fed, say job creation is essential to ensure the sustainability of the expansion.

In the only other post-war jobless recovery -- after the 1990-91 recession -- it took 14 months for the number of employed to get back to where it stood when the recession ended. This time it is 22 months, and counting.

The Labor Department also said prices of non-petroleum imports rose 0.9% in the 12 months through September, contrasted with a 0.9% drop a year earlier. Economists said that turnaround reflected a long slide in the dollar's value. The greenback's drop has accelerated in recent weeks, which could offer more relief for U.S. producers.

In another hopeful economic sign, an industry group said Thursday that manufacturing executives had turned more optimistic. The Manufacturers Alliance/MAPI said its quarterly index of future business activity jumped to 68 in September from 60 in June, reaching its highest level since December 1997.

U.S. chief executives' confidence in the nation's economy also rose. The Conference Board's measure of business confidence, which had improved to 60 in the second quarter of 2003, climbed to 67 in the third quarter. A reading of more than 50 points means there were more positive than negative survey responses.

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