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News > Jobs & Economy
An optimistic job signal?
With average weekly claims at 3-year low, there's some sentiment big employment gains are coming.
March 25, 2004: 2:15 PM EST

NEW YORK (CNN/Money) - New jobless claims were little changed last week, the government said Thursday, coming in near Wall Street forecasts and raising some hopes for a strong monthly jobs report next week.

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The Labor Department said 339,000 people filed new claims for state unemployment benefits in the week ended March 20, compared with a revised 338,000 the prior week.

But both those figures came in lower than the readings from the past few weeks. The March 13th week's report was the lowest number of new claims since Jan. 13, 2001, when the number of new claims was only 316,000.

Economists, on average, expected 338,000 new claims last week, according to

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The closely watched four-week moving average of initial jobless claims, which irons out weekly fluctuations, declined for a fourth straight week, to 341,500 from 344,500.

That was the lowest reading for average claims since 336,500 in January 2001.

Employment report could roil markets

The lack of job growth, despite other indications of an improving economy, has become a major concern of economists and investors, as well as an issue in this year's presidential election. Thus the report on March payrolls and unemployment, due April 2, will be closely watched.'s survey of analysts finds the unemployment rate is expected to remain unchanged at 5.6 percent, while the number of new jobs is expected to rise 100,000. But many payroll forecasts have proven overly optimistic in recent months. February's gain of 21,000 came after forecasts of 125,000 new jobs.

Mark Vitner, economist with Wachovia Securities, said Thursday's report is a significant sign that the employment picture could brighten soon. He is forecasting that net new jobs will post a 225,000 gain next week.

He said that will be enough to send stocks, which are down for the year, up sharply, while causing a sharp selloff in the bond market due to expectations of higher interest rates.

"If we have a gain above 200,000 it'll change investors' outlook considerably," he said. "There is concern if we do not see stronger job growth soon, the economy will simply run out of gas. But I feel more certain that at any point in this recovery we are going to see strong job growth in the next report."

But Bill Cheney, chief economist for John Hancock Financial Services, said that he's still sticking to the more cautious 100,000 job-growth target for next week's report. He said that the latest jobless claims numbers aren't different enough from past reports that preceded disappointing monthly jobs data.

"It's only telling us one side of the story, the data on firing. It's not telling us about hiring," Cheney said. "We seem to be in a range for initial claims that would have been enough for healthy job growth. But in this cycle, it seems to not be enough."

Cheney said even if there is job growth of 200,000 in the March report, it will take a couple more months above that level to get the Federal Reserve to look at raising interest rates. But he agrees with Vitner that if there is a rise in payrolls of 200,000 in next week's report, it'll shake both stock and bond markets.

Other signs of turnaround

There have been other signs of a possible turnaround in the job market and the economy in recent weeks.


A survey of 16,000 employers by Milwaukee-based staffing company Manpower International released last week found that 28 percent expect to hire more workers from April to June -- the highest level since the first quarter of 2001. The survey also found recruiting and hiring efforts are likely to pick up in all 10 sectors that Manpower tracks.

The National Association of Manufacturers released a survey of 76 small to large manufacturers Thursday that found 55 percent expect to increase hiring this year, while another third expect to keep staff levels the same. Only 16 percent expect to cut staff.

"This is the most optimistic manufacturing survey we've seen in some time," said Jerry Jasinowski, president of the group.

In addition, the UCLA Anderson forecast released Thursday came out with a far more bullish forecast than its previous report in December. It predicted that the battered manufacturing sector, which has been hemorrhaging jobs for 43 straight months, would see about 45,000 created on average each month this year.

Two surveys of large layoffs, one by placement firm Challenger Gray & Christmas, the other by the government's Bureau of Labor Statistics, both found layoffs significantly lower in February. The Challenger figure of 77,250 was 44 percent below the year-ago number, while the BLS figure of 84,201 was the lowest of any February since 1997.

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But John Challenger, president of the firm bearing his name, said a slowing in layoffs has not yet translated into a pickup in hiring.

"I do think the heavy job cuts we've seen the last three years does seem to be slowing down," he said. "We're moving into a new period in which companies are loath to go out and create many jobs but they're eager to hold onto the people they already have."

Some other reports also showed some signs of economic strength.

The National Association of Realtors reported Thursday that existing home sales rose 2 percent in February, in line with Wall Street forecasts, while government data Wednesday showed sales of new U.S. homes surged unexpectedly last month to the highest level since August.  Top of page

Reuters contributed to this report

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