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Jobless claims edge up
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August 23, 2001: 11:41 a.m. ET
But new claims for unemployment benefits remain under 400,000
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NEW YORK (CNNfn) - The number of new jobless claims in the United States edged up last week while the number of workers drawing unemployment benefits for more than a week rose to its highest level in 9 years, hinting at continuing weakness in the job market.
New claims for state unemployment benefits rose to 393,000 in the week ended Aug. 18 from a revised 385,000 the prior week, the Labor Department reported. Analysts surveyed by Briefing.com had forecast new claims of 390,000.
The four-week moving average of new claims, considered a better gauge of jobless trends, rose to 378,750 from the previous period's revised 372,000. Economists watch the four-week moving average more closely because it smoothes fluctuations in the weekly data.
Continued claims -- those by workers who already have claimed at least a week of benefits -- rose to 3.18 million in the week ended Aug.11, the latest data available, after a revised reading of 3.05 million the prior week. Continued claims were at their highest level since Sept. 26, 1992, when they reached 3.2 million.
"[In] the past year, the number of people receiving state benefits has increased by more than a million," said Steven Wood, economist with FinancialOxygen. "Although the pace of layoffs has eased, job creation remains nonexistent."
Click here for the latest on job cuts
U.S. companies have cut hundreds of thousands of jobs during a year-long economic slowdown, and the Federal Reserve has responded by cutting its target for short-term interest rates seven times, from 6.5 percent to 3.0 percent, in an effort to keep consumers spending and fend off a recession.
Though the U.S. so far has avoided a recession -- defined as two consecutive quarters of shrinking gross domestic product (GDP) -- the Fed said Tuesday it saw continuing risks of weakness in the economy. Particularly worrisome to the Fed were continuing slumps in capital spending and corporate profits, which could lead companies to cut more jobs.
"These [jobless] numbers confirm everything that came out in the Fed statement," said Anthony Chan, chief economist with Banc One Investment Advisors. "Things are going to get worse before they get better on the unemployment rate front."
Click here for CNNfn.com's economic calendar
The unemployment rate was 4.5 percent in July, the Labor Department reported, unchanged from June, while employers cut 42,000 jobs outside the farm sector, compared with a revised loss of 93,000 jobs in June.
"We're probably going to see unemployment at 5 percent by the time this is over," Chan said. "The good news is, this is still relatively low compared to the [past] two recessions."
Also encouraging is the fact that the initial claims number has been below 400,000 for five straight weeks, meaning the number of job cuts may be leveling off.
"Companies seem to have acted very quickly this time around once they realized that [economic] growth was slowing sharply," said Ian Shepherdson, chief economist with High Frequency Economics Ltd. "Overall, the data suggest talk of a labor market meltdown is overdone." 
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