Originally created 04/23/04

Jobless claims drop by 9,000 last week



WASHINGTON -- Fewer people signed up for jobless benefits last week, a sign that companies are feeling less inclined to slash their work forces now that the economy is rebounding.

The Labor Department reported Thursday that new applications filed for unemployment insurance dropped by a seasonally adjusted 9,000 to 353,000 for the week ending April 17. The decline, which came after new applications rose sharply in the previous week, left claims at a level that was higher than the 340,000 analysts were expecting.

Still, the overall trend in new jobless claims filings has been a slow drift downward. Claims hit a high last year of 444,000 in the middle of April. This year, new filings for jobless benefits each week have managed to stay under 400,000, a sign that the jobs market is getting better, economists say.

In a second report from the department, wholesale prices rose by 0.5 percent in March, up from February's 0.1 percent increase. Much of last month's increase reflected higher costs for food products, which jumped by 1.5 percent, and for energy, including gasoline, which went up by 0.6 percent.

With the economy gaining momentum, some companies are finding it easier to raise prices. But Federal Reserve Chairman Alan Greenspan on Wednesday said that inflation remains low and isn't a problem for the economy now.

Healthy productivity gains by companies and many businesses still operating below full throttle "to date have checked any sustained acceleration of the general price level and should continue to do so for a time," Greenspan said on Capitol Hill.

But it is the job of Fed policy-makers to be on watch against an unwanted inflation flare-up and take steps to keep prices stable, he stated. At some point low interest rates must rise to keep inflation in check, Greenspan said. He didn't say when that would be.

Most economists agree that the Fed will hold a main short-term interest rate steady at 1 percent, the lowest since 1958, when it meets next on May 4. Beyond that, analysts offer differing opinions about where rates are heading. A growing number believe the Fed will start to push rates up later this year, possibly in August. Others, however, don't believe a rate increase will come until 2005.

On the labor market front, Greenspan welcomed a recent burst in hiring. After months of sluggish job growth, the economy added a net 308,000 jobs in March, the most in four years.

That suggests that "businesses are becoming more willing to add to their work forces, with the result that the labor market now appears to be gradually improving after a protracted period of weakness," Greenspan said on Wednesday.

Still, the "anxiety that many in our work force feel will not subside quickly," the Fed chief said. He noted that the average duration of unemployment in March was 20 weeks, compared with 12 weeks in September 2000.

The wholesale price report was originally scheduled to be released on April 8, but it was delayed because of problems converting categories to a new classification system.