Your Economy (No Politics)

[Bullwinkle]

U.S. Initial Jobless Claims Fell 11,000 Last Week
Victor Epstein in Washington


March 23 (Bloomberg) -- First-time claims for U.S. unemployment benefits fell last week, the first decline in four weeks, suggesting job growth will keep fueling consumer spending and economic expansion.

Initial jobless claims decreased by 11,000 to 302,000 the week ended March 18, the Labor Department said today in Washington. Continuing claims, which measure the number of people remaining on benefit rolls, rose to 2.472 million the week ended March 11 from a five-year-low of 2.434 million.

Surveys by Duke University and Manpower Inc. show business executives plan to boost hiring this year. Employers in February added the most new jobs in three months, keeping the unemployment rate near a five-year low and indicating the Federal Reserve has room to keep raising interest rates without stifling the labor market.

``The Fed is worried wage pressures will develop from such strong gains, which would be inflationary,'' said Zoltan Pozsar, an economist at Moody's Economy.com in West Chester, Pennsylvania. ``They want to slow growth down, so we can expect more rate hikes.''

Jobless claims were expected to fall to 305,000 last week from a previously reported 309,000, according to the median forecast of economists surveyed by Bloomberg News. Estimates ranged from 295,000 to 315,000.

The less-volatile four-week average of initial claims increased to 303,500 from 297,500 the prior week.

The dollar held gains against the euro after the report while Treasury notes stayed higher. The yield on the benchmark 10-year note fell 2 basis points to 4.69 percent at 8:54 a.m. in New York. A basis point is 0.01 percentage point.

Job Growth

Nariman Behravesh, chief economist at Global Insight Inc. in Lexington, Massachusetts, estimates that the U.S. economy needs to create about 150,000 jobs a month to accommodate new workforce entries, which is consistent with new jobless claims of about 320,000 a week. Job creation typically increases as claims fall.

`Pretty Robust'

Employers added 243,000 new jobs in February, the most in three months, according to the Labor Department. Monthly payroll gains averaged 165,080 last year.

``We continue to see employment growth in excess of 200,000 jobs a month or even 225,000, which suggests economic momentum is still pretty robust,'' Behravesh said before the report.

The Fed has increased its target interest rate 14 times since June 30, 2004. Policy makers meeting March 27 and 28 are expected to raise the target rate another quarter-point, to 4.75 percent, according to a Bloomberg survey of economists.

Thirty-four states and territories reported decreased claims for the week ended March 11, while 19 reported an increase.

The unemployment rate among people eligible for benefits, which tends to track the U.S. jobless rate, was unchanged at 1.9 percent the week ended March 11. Those figures are reported with a one-week lag.

Hiring Plans

``Businesses have to rely increasingly on labor as opposed to productivity gains to meet rising demand,'' said Eric Green, chief economist at the securities arm of Countrywide Financial Corp. in Calabasas, California. ``Labor conditions are as good as they're going to get. For now, we're at a sweet spot.''

The Duke survey of U.S. chief financial officers published March 7 found 59 percent planned to increase hiring this year. A survey of chief executives published March 14 by Manpower, the world's second-largest provider of temporary workers, found that 30 percent expected to increase hiring next quarter, compared with 23 percent this quarter.

Kia Motors Corp., South Korea's second-largest automaker, announced plans March 13 to build its first U.S. vehicle assembly in West Point, Georgia. The Seoul-based company chose a site near its parent Hyundai Motor Co. to tap growing sales in North America. The new plant is expected to create 2,500 local jobs.

``Kia has entered an aggressive growth phase in the U.S.'' Chung Eui-Sun, its chief executive, said in a statement.

Wages were 3.5 percent higher in February than the same month a year ago, the biggest 12-month increase since September 2001. The economy will depend more on job growth this year as housing, one of its biggest sources of strength over the past couple of years, slows.

Mortgage industry employment is expected to decline to 420,000 workers this year from 500,000, according to the Mortgage Bankers Association.

http://www.bloomberg.com/apps/news?pid=10000087&sid=a0lELLO1_d2Y