Originally created 08/20/04

New claims for unemployment benefits drop for a third straight week



WASHINGTON -- The number of Americans filing new claims for unemployment benefits edged down last week for a third consecutive time, signaling that the labor market may be improving after hitting a speed bump in June and July.

The Labor Department reported Thursday that 331,00 laid-off workers filed new applications for unemployment benefits last week, down 3,000 from the previous week.

It marked the third consecutive weekly decrease and pushed claims down to the lowest level in six weeks.

The four-week moving average, which helps smooth out week-to-week volatility, dropped to 337,000, down from 339,500 the previous week.

The Bush administration, which is counting on an improving economy to bolster the president's re-election chances, suffered a setback in the all-important area of job creation over the past two months. The economy created just 78,000 new jobs in June and an even smaller 32,000 jobs in July.

The weak job growth coincided with a pronounced drop in a number of economic statistics in the early summer, leading Federal Reserve Chairman Alan Greenspan to say that the country had encountered a "soft patch." However, Greenspan and other economists are forecasting that the slowdown will be short-lived.

The Labor Department report said that 2.9 million Americans were drawing unemployment benefits for the week ending Aug. 7, an increase of 16,000 from the previous week and the highest level for this figure since July 17.

Labor Department analysts said that there had been no discernible effect to the claims data last week from Hurricane Charley, which did not strike Florida until the end of the week.

But analysts said claims data from Florida is likely to show the impact of the hurricane in coming reports as workers whose businesses were destroyed show up at claims offices seeking benefits.

The Federal Reserve last week raised a key short-term interest rate for the second time this year and signaled that it planned to keep raising rates to make sure that a strengthening economy does not trigger inflation pressures.

Economists interpreted last week's boost in the federal funds rate to 1.5 percent as evidence that Greenspan and his colleagues are fairly confident that the slowdown in economic growth seen in the early summer will not be long-lasting.