The index of leading economic
indicators posted a fourth straight increase in August and initial
jobless claims remained close to 400,000, suggesting the
accelerating U.S. economy isn’t yet improving job prospects for
American workers.
The 0.4 percent gain in the New York-based Conference Board’s
gauge of how the economy will perform over the next three to six
months followed a rise of 0.6 percent in July. First-time claims
fell to 399,000 in the week ended Saturday from a revised 428,000
the week before, the Labor Department reported in Washington.
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The Federal Reserve this week held its benchmark interest at
1 percent, the lowest since 1958, saying that the labor market is
showing signs of weakening even as the economy accelerates. The
gain in the leading indicators reflected increased money supply
and building permits.
The index is “certainly consistent with other indicators
recently, and it points to strong growth in the second half this
year and into 2004,” said Richard DeKaser, an economist at
National City Corp. in Cleveland. “So many of these indicators
suggest we out to be seeing an improving labor market, but that
hasn’t yet materialized.”
“Over the four-month period we’ve seen pretty steep gains in
this index,” said Richard DeKaser, an economist at National City
Corp. in Cleveland. “It’s certainly consistent with other
indicators recently, and it points to strong growth in the second
half of this year and into 2004.”
The number of Americans filing for unemployment benefits
declined for the first time in four weeks, while holding close to
the 400,000 reading that some economists say signals job market
weakness. Companies have been able to keep up with increases in
demand this year without hiring because of gains in efficiency,
economists said, and the economy so far has showed few signs of
generating the jobs needed to sustain growth.
The economy will expand at a 4.5 percent rate from July
through September, the fastest since the first quarter of 2002,
according to the median estimate of 59 economists surveyed by
Bloomberg News from August 28 through September 9. Last month,
economists had projected third-quarter growth of 3.6 percent.
The four-week average of jobless claims rose for a fourth straight
week to 410,750 from 408,750 the week before. A year earlier, the
average was 411,000 after rising six straight weeks.
Economists including Drew Matus of Lehman Brothers Inc.
attributed some of the drop in claims to the Labor Day holiday.
The decrease of 29,000 was the largest since 31,000 in the week
ended April 5.
“The underlying trend in claims is most likely somewhere
between 399,000 and 428,000, consistent with a slowing in the pace
of layoffs but not any hiring as yet,” said Jayanth Nazareth,
economist at J.P. Morgan Chase in New York.
The number of people continuing to collect state unemployment
insurance rose by 39,000 to 3.683 million in the week ended Sept.
6. The total was the highest since 3.78 million the week ended
June 28.
The insured unemployment rate, which tends to track the
jobless rate, held at 2.9 percent. During that week 24 states and
territories reported an increase in new claims, 28 reported a
decrease and one had no change.
Productivity growth more than tripled to a 6.8 percent annual
pace in the second quarter from the first. The economy lost 93,000
jobs in August, the most since March, the government reported.
Bloomberg News
