Unemployment claims, indexes bring bad news
NEW YORK - Higher unemployment claims and weak readings from two economic indexes reinforced recession worries yesterday. The Labor Department said applications for unemployment benefits rose to 372,000, an increase of 17,000 from the previous week.
NEW YORK - Higher unemployment claims and weak readings from two economic indexes reinforced recession worries yesterday.
The Labor Department said applications for unemployment benefits rose to 372,000, an increase of 17,000 from the previous week.
Separately, the Conference Board's gauge of future economic activity rose 0.1 percent for March, reversing five months of decline. But the private business group's indicator has shown a 3.3 percent annual rate of decline since March 2007.
That is "the kind of result that, whenever we've seen it in the past, the U.S. economy has been heading into a recession," said Michael Gregory, senior economist for BMO Nesbitt Burns, a Toronto investment bank. "The recession signal here is clear and unequivocal."
Stocks were mixed, with the Dow Jones industrial average up a slim 1.22 points, the Standard & Poor's 500 index up 0.85 of a point, and the Nasdaq composite index down 8.28 points.
The Conference Board index is designed to forecast economic activity in the next three to six months based on 10 economic components, including stock prices, building permits, and initial claims for unemployment benefits.
The Conference Board, based in New York, said another of its indexes, which measures current economic activity, had also deteriorated in recent months, with weakness becoming more widespread among the components of both.
The readings suggest "economic weakness is likely to continue in the near term," Ken Goldstein, labor economist at the Conference Board, said in a statement accompanying the report.
The jobless numbers told the same story. The four-week average for jobless claims was 376,000, down only slightly from 376,750 the previous week. Aside from the period in the fall of 2005 after Hurricane Katrina, the four-week average for claims has risen to levels last seen in 2003, when the country was mired in a long jobless recovery after the 2001 recession.
Claims have been unusually volatile in recent weeks, falling 51,000 two weeks ago after having risen 35,000 the week before. Analysts said that claims had been difficult to read because of trouble the government is having adjusting the figures for seasonal changes to reflect this year's unusually early Easter and because of the impact of a strike at a key parts supplier for General Motors Corp.
While the weekly unemployment claims were in line with economists' expectations, those expectations, overall, are grim.
Ian Shepherdson, chief economist at High Frequency Economics Ltd., said the claims average for the last two months had risen to a level similar to that at the start of the 2001 recession. He said he expected claims to keep rising in coming months and be above 400,000 weekly by this summer.
"We can think of no good reason why claims should now level off, and plenty of reasons why they should be expected to rise further," Shepherdson said.
In March, the unemployment rate jumped to 5.1 percent as businesses cut 80,000 jobs, the biggest drop in payrolls in five years. Many economists say they believe that was the most dramatic indication to date that the country had fallen into a recession.
