NEWS AND COMMENTARY
August 31, 2000
Jobless Claims Fell Last Week
By Dow Jones Business News
Survey Reveals Demand for Workers Will Soar in 4th Quarter ... Weiss comments
WASHINGTON -- The number of Americans filing first-time claims for unemployment benefits declined last week for the first time in a month, but government data nevertheless indicated a big softening in the labor market.
Initial jobless claims benefits fell 3,000 to 318,000 in the week ended Aug. 26, the Labor Department said Thursday. The decline was smaller than the 4,000 drop Wall Street was expecting. But that forecast was rendered largely meaningless by a sharp upward revision in claims for the week of Aug. 19.
A Labor Department spokeswoman said a "processing problem" caused government statisticians to undercount by 7,000 the number of claims filed in the Aug. 19 week. The department accordingly revised its tally of claims for that week to 321,000. That raised the four-week moving average of claims to a 20-month high of 313,000.
The numbers suggested that the tightest U.S. labor market in three decades is finally starting to soften as economic growth slows in response to a battery of interest-rate increases by the Federal Reserve. The Fed has raised its key interest rate six times since last June to a 9 1/2-year high of 6.5%.
But given signs of slower economic growth, Wall Street no longer expects the Fed to raise rates again next year. Still, markets will be watching closely for Friday's report on August unemployment. Economists surveyed by Thomson Global Markets expect the unemployment rate to hold steady at 4.0% and anticipate the nation shed around 33,000 jobs from nonfarm payrolls compared with July's drop of 108,000.
In all, 21 states and territories reported an increase in claims for the week of Aug. 19 while 32 reported a decrease. Massachusetts reported an increase of 1,112 claims that it attributed largely to the strike at Verizon Communications. In all, striking Verizon workers filed 3,713 claims, the Labor Department said.
In California, claims fell by 4,993 in the Aug. 19 week because of fewer layoffs in the trade and service industries, and in agriculture. Missouri reported a decline of 4,639 claims but provided no explanation for the decline. Illinois reported a decline of 3,641 because of fewer layoffs in the trade, service and manufacturing industries.
Continuing claims for the week of Aug. 19 rose 31,000 to 2,178,000, the government said.
Though this month's jobless claim data seem to indicate an easing of the tight labor market, the truth is employers' hiring needs are at the highest level ever recorded. A recent survey of 16,000 firms by Manpower Inc., the largest placement firm of temporary workers in the U.S., shows that 32% of companies intend to hire workers in the fourth quarter. "The results herald the strongest year-end demand in the 25-year history of the poll," according to Manpower. "Results for the entire year surpass anything seen previously."
Clearly, the labor market will tighten further by the end of the year. This week's drop in jobless claims is just the beginning.
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