Jobless claims drop but technical fluke clouds layoffs picture

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Posted 9:26AM on Thursday, April 11, 2002

WASHINGTON - Fewer Americans filed claims for unemployment insurance last week, but the layoffs picture continues to be clouded by a technical fluke that was a big factor in the prior week's surge in claims. The Labor Department reported Thursday that new claims for jobless benefits dropped by a seasonally adjusted 55,000 to 438,000, for the work week ending April 6. Even with the decline, a government analyst said the claims number continued to be inflated because of the fluke: Laid-off workers seeking to take advantage of a federal extension for benefits were required to submit new claims. Congress recently passed legislation signed into law by President Bush that provided a 13-week extension of jobless benefits. The week before, claims shot up by 79,000 to 493,000, according to revised figures. That was an even bigger jump than initially reported. Because of the refiling requirement, the weekly claims figures -- usually a good proxy for layoffs -- could be volatile in the next few weeks. The more stable four-week moving average of new claims, which smoothes out week-to-week fluctuations, also rose last week to 433,750, the highest level since early December. Because of the new law, private economists predicted that the number of laid-off workers continuing to draw benefits would be higher in the weeks ahead as unemployed people received benefit extensions. Laid-off workers continuing to receive unemployment benefits rose to 3.8 million for the work week ending March 30. That was the highest level since March 19, 1983. Given the distortions, economists continued to be optimistic that the jobs market-- battered by the recession that began in March 2001 and jolted by the Sept. 11 terror attacks-- was getting better. U.S. companies added jobs in March for the first time in eight months, fresh evidence that the economy is on the road to recovery. Last week, the government reported that payrolls grew by 58,000 during the month, a welcome sign after companies had slashed hundreds of thousands of positions as they tried to cope with the slump. Even with the improvement, job growth in March wasn't strong enough to prevent a rise in the nation's unemployment rate, which rose to 5.7 percent. Citing mounting signs that the economy is staging a comeback, the Federal Reserve opted to hold short-term interest rates steady in January and in March. The Fed cut rates 11 times last year in an effort to rescue the economy from the grip of a recession. Economists said the timing of when the Fed will begin to raise rates will linked in large part to how the employment situation shapes up. Some economists believe the Fed could move to boost rates as early as June or August. Others said it could come later. Separately, the Labor Department reported that the price of goods imported into the United States in March soared 1.1 percent. A big part of the increase stemmed from a 15.7 percent jump in the price of imported petroleum products, including crude oil, the largest increase in nearly three years. ---- On the Net: Jobless claims: http://www.doleta.gov/