Posted on: Friday, May 11, 2001

Jobless claims fall by 41,000

By Leigh Strope
Associated Press Labor Writer

WASHINGTON — New claims for state unemployment insurance dipped last week but still remained at a high level, suggesting employers' demand for workers continues to be weak.

The Labor Department reported Thursday that initial applications for jobless benefits dropped 41,000 to a seasonally adjusted 384,000 for the work week ending May 5.

The last time jobless claims stood at 384,000 was July 4, 1998.

Claims for the week ending May 5 were down from the week before, when a revised 425,000 claims were posted — keeping claims at their highest level since March 23, 1996, when they stood at 428,000.

But in the latest report, the more stable four-week moving average of jobless claims, which smoothes out week-to-week fluctuations, was 402,500, a decrease of 3,000 from the previous week's revised average of 405,500.

The sluggish economy has forced companies to cut jobs and production, and manufacturing has been hardest hit by the slowdown. The nation's unemployment rate jumped to 4.5 percent in April.

The unemployment picture is expected to worsen in the months ahead, and some economists worry that consumers might really tighten the belt on spending, which would further weaken the struggling economy.

Consumer spending accounts for two-thirds of all economic activity and has been a major force in keeping the economy afloat during the slowdown which started in the second half of last year.

The Federal Reserve, seeking to ward off recession, has cut interest rates four times this year, totaling 2 percentage points. Many economists expect another rate reduction when policy-makers meet Tuesday.

In the first three months of this year, the economy grew at an annual rate of 2 percent, twice as fast as many economists predicted and double the 1 percent rate posted in the fourth quarter.

The largest increases in initial claims for the week ending April 28 were in North Carolina, 9,020; Michigan, 5,040; Iowa, 3,318; Alabama, 2,594; and Georgia, 1,803.

The largest decreases were in New York, dropping 10,536; Massachusetts, dropping 4,608; Wisconsin, dropping 4,042; New Jersey, dropping 3,225; and Pennsylvania, dropping 2,989.

For the work week ending April 21, the highest insured unemployment rates were in Puerto Rico, 6.4 percent; Alaska, 5.2 percent; Oregon, 3.5 percent; Washington, 3.4 percent; Rhode Island, 3.1 percent; Idaho, 2.9 percent; Wisconsin, 2.9 percent; California, 2.8 percent; Pennsylvania, 2.8 percent; Arkansas, 2.7 percent; and Michigan, 2.7 percent.