WASHINGTON, July 1, 2004
(CBS/AP) The number of new people signing up for jobless benefits rose slightly last week, although the overall pace of recent applications suggests the labor market remains in recovery mode.
The Labor Department reported Thursday that new filings for unemployment insurance rose by a seasonally adjusted 1,000 to 351,000 for the week ending June 26. Economists were forecasting a decrease in claims to around 345,000.
Still, when compared to the same week last year, the latest figures clearly showed that the pace of layoffs has moderated considerably. A year ago, new applications for unemployment benefits stood at 427,000. Claims hit a high last year of 444,000 in the middle of April and have slowly drifted downward since that time.
In other economic news, manufacturing activity expanded in June for the 13th month in a row, although the pace was slightly slower, the Institute for Supply Management reported.
The group's manufacturing index clocked in at 61.1 in June, down from 62.8 in May. An index reading above 50 signifies expansion in the sector, while a reading below that indicates contraction.
Construction spending rose by 0.3 percent in May from April to seasonally adjusted annual rate of $988.5 billion, an all-time monthly high, the Commerce Department reported. Although the increase for May is down from a 1.2 percent gain in April, the report still indicated that the construction market is in fine shape.
The value of residential projects private builders broke ground on also rose to a record rate of $532.3 billion in May, representing a 0.8 percent increase from April — a sign that builders still feel good about housing demand, even as interest rates are on the rise.
Economists generally view the weekly claims figures as volatile, meaning they can swing a lot from week to week, and they say seasonal adjustments can be difficult sometimes.
When last week's jobless claims figure is not adjusted for seasonal factors, it showed a decline of 3,311 — to 320,120.
Other recent reports suggest the labor market is picking up.
After a long slump, companies began stepping up hiring in recent months. Economists say they think the economy added around 240,000 jobs in June, following a sizable 248,000 gain in payrolls in May. The government releases the employment report for June on Friday.
Since December, the economy has added some 1.2 million new jobs. It is still down 1.2 million jobs from when President Bush was inaugurated in January 2001.
Economists also are expecting the nation's unemployment rate to hold steady at 5.6 percent for June. They believe that hourly earnings for workers should go up by a modest 0.3 percent from the previous month and that the average work week should rise slightly to 33.9 hours.
With the economy on solid ground, the Federal Reserve on Wednesday boosted a key short-term interest rate by one-quarter percentage point to 1.25 percent, its first rate increase in four years.
The Fed said that data since its previous meeting in May indicated the economy is "continuing to expand at a solid pace and labor market conditions have improved."
The Fed signaled further rates increases are likely to come to head off inflation, but that the pace of such hikes should be gradual. If inflation shows signs of being worse than expected, then Fed policy-makers made clear they will act more aggressively.
Personal income in May rose 0.6 percent, but so did the Consumer Price Index, suggesting that households enjoyed no net increase in purchasing power.
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