U.S. initial jobless claims fall to 315,000

Courtney Schlisserman and Carlos Torres

Thursday, May 6, 2004 | 10:54 a.m.

The number of Americans filing initial claims for jobless benefits dropped to 315,000 last week, the fewest since October 2000, a government report showed today.

Initial applications fell by 25,000 in the week that ended Saturday from 340,000, the Labor Department said in Washington. The number of people continuing to collect state jobless benefits declined to 2.94 million in the week that ended April 24, the lowest since June 2001. The statistics are reported with a one- week lag to initial claims.

The labor data precede a report tomorrow that may show the economy added 170,000 jobs last month following the biggest gains in almost four years during March. Job creation is needed to keep consumer spending strong as borrowing costs increase and the effects of last year's tax cuts diminish, economists said.

"We remain of the view that the trend in payroll growth will be 200,000 to 250,000 by the end of summer," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York. The economy has added an average of 115,000 jobs a month in the last six.

New claims had been expected to fall to 335,000 last week from a previously reported 338,000, according to the median of 38 economists' forecasts in a Bloomberg News survey. Estimates ranged from 325,000 to 345,000.

A separate report showed U.S. worker productivity grew at a 3.5 percent annual rate from January through March, trailing economic growth for a second quarter, as businesses boosted payrolls and worked employees longer to keep up with demand.

Unit labor costs, or the amount paid for each unit of production, rose 0.5 percent at an annual rate, the productivity report showed.

The increase followed no change in the prior three months. Labor costs in the first quarter were 1.3 percent lower than a year earlier.

"Hiring appears to have picked up," members of the Federal Reserve's Open Market Committee said in a statement Tuesday after their meeting in Washington. Policy makers voted unanimously to keep the benchmark U.S. interest rate at 1 percent, almost a 46- year-low, and said they can lift borrowing costs at "at a pace that is likely to be measured" to guard against accelerating inflation.