Jobless claims drop
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February 14, 2002: 9:29 a.m. ET
New weekly claims for unemployment benefits fall again as labor market heals.
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NEW YORK (CNN/Money) - New claims for jobless benefits fell in the United States last week, the government said Thursday, as a labor market battered by a recession in the world's largest economy continued to stabilize.
The Labor Department reported that the number of Americans filing new claims for unemployment benefits fell to 373,000 in the week ended Feb. 9 from a revised 381,000 the preceding week. Economists surveyed by Briefing.com expected 380,000 new claims last week.
"I think what we're seeing is a gradual decline in the jobless claim trend from its peaks in the immediate aftermath of Sept. 11," Deutsche Bank Asset Management chief economist Joshua Feinman told CNNfn's Before Hours program. "It suggests the labor market is not strong, but it's bottoming, and that's consistent with the overall [economic] picture."
The four-week moving average of new weekly claims, which smoothes out fluctuations in the weekly data, dipped to 376,000 last week from a revised 381,500 in the prior week.
But continued claims - the number of people drawing benefits for more than a week - rose slightly to 3.43 million in the week ended Feb. 2, the latest week of available data, from a revised 3.41 million the prior week.
Separately, the Commerce Department reported that inventories at U.S. businesses fell 0.4 percent to $1.13 trillion in December after falling 1.2 percent in November. Economists surveyed by Briefing.com expected inventories to fall 0.5 percent.
And the Labor Department said U.S. import prices rose 0.4 percent after falling 0.9 percent in December, the first gain for import prices since May 2001. Export prices fell 0.1 percent after falling 0.3 percent in December. Briefing.com had no consensus estimate for import and export prices, both of which have fallen nearly every month during a prolonged slowdown in the global economy.
U.S. stock futures rose after the data were released, pointing to a higher opening on Wall Street, while most Treasury bond prices fell.
To keep consumers spending despite an unemployment rate rising close to 6 percent, the Federal Reserve cut its target for short-term interest rates 11 times in 2001 to levels not seen since 1961.
But Fed policy makers decided at their policy meeting in January to leave rates alone, indicating they saw signs that the economy was beginning to improve.
Even as the economy improves, however, job cuts could continue, especially since business leaders generally are more pessimistic about the economy's chances than economists. The unemployment rate, which recently dropped to 5.6 percent, is a lagging indicator and could rise again in the coming months.
Still, consumers have continued to spend, as Wednesday's retail sales data indicated, keeping the economy growing. Consumer spending makes up two-thirds of U.S. gross domestic product (GDP), the broadest measure of economic health, which was surprisingly positive in the fourth quarter after shrinking in the third.
So far, then, a technical recession - two straight quarters of shrinking GDP - has been avoided. But economists at the National Bureau of Economic Research, who define recessions differently, think a recession began in March 2001. The NBER recently said it hadn't seen enough data to declare the recession over.
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A pile-up of inventories on manufacturers' shelves was one of the factors that triggered the slowdown in the broader economy, leading to more than a million job cuts. After a spending boom in the late 1990s, businesses suddenly put the brakes on spending, leading to a huge inventory overhang and a recession in the manufacturing sector that's lasted for more than a year.
But manufacturers have been steadily unloading goods for months, paring inventories by 5.9 percent in all of 2001, according to the Labor Department, paving the way for production to increase again.
"Businesses were liquidating inventory last fall at a frenetic pace and adding to weakness in the economy's production," Feinman said. "It looks like the rate of inventory liquidation is starting to slow, and a basis is forming from that reduction for a rise in the economy."
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