WASHINGTON -- The number of people filing new claims for unemployment benefits dropped last week to the lowest level in more than three years, a promising sign that companies feel better about the economy's prospects and are less inclined to get rid of workers.
The Labor Department reported Thursday that new applications filed for jobless claims declined by a seasonally adjusted 14,000 to 328,000 for the week ending April 3. That marked the lowest level since Jan. 13, 2001 - the week before President Bush's inauguration.
In other economic news, consumers, lured by spring fashions, were in the buying mood in March, another good sign for the economy.
Wal-Mart Stores Inc., Costco Wholesale Corp., Limited Brands, J.C. Penney Co. Inc. and Nordstrom Inc. all reported results that topped Wall Street forecasts. The robust results cut across industry sectors, even some of the long-struggling department stores.
Consumer spending accounts for roughly two-thirds of all economic activity in the United States, making their behavior is a major factor in shaping the economic recovery.
On the layoffs front, the jobless claims figures were better than economists were expecting. They had called for a slight decline from the previous week to around 340,000.
The more stable four-week moving average of claims, which smooths out weekly fluctuations, also went down last week by 3,250 to 336,750. That represented the lowest level since Nov. 25, 2000.
The latest snapshot of layoffs raised hopes that recent improvements seen in the labor market might be sustained. A complete turnaround in the jobs market is the one missing piece of the economic recovery puzzle, analysts say.
"I think executives' mindsets are changing," said Clifford Waldman, economist at Manufacturers Alliance/MAPI, a research group. "They went from 'I don't know whether this recovery will stick around so I need to keep a lid on costs' to 'This recovery has the potential to be strong so I better get my work force in place to meet it.' That's essentially the mentality change."
The employment situation showed signs of turning an important corner in March. The economy added 308,000 jobs last month - the most in four years. While that's definitely an improvement from payroll gains registered in previous months, economists want to see net job gains in the range of 200,000 to 300,000 a month on a consistent basis before they declare a recovery in the jobs market.
The nation's unemployment rate, meanwhile, edged up to 5.7 percent in March as an improved economic climate beckoned more job seekers to look for work again.
Even with the robust job gains in March, the economy has lost a net 1.84 million jobs since January 2001, the month President Bush took office.
That's something presumptive Democratic presidential nominee John Kerry says is evidence that President Bush's economic policies aren't working. Bush, however, says the robust employment gain in March shows his economic policies are making the economy stronger and translating into job growth.
Economists believe the economy grew at a healthy annual rate of around 4.5 percent in the first quarter of this year and is expanding close to that pace in the current April-to-June quarter.
The Federal Reserve has held a key interest rate at an extra-low level of 1 percent to motivate consumers and business to spend and invest more, forces that would bolster economic growth.
Some economists believe the Fed won't start to nudge rates up until 2005. But others - encouraged that the labor market will continue to get better - believe the Fed will start pushing up rates later this year.
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