Employment reports offer bleak outlook
Two employment reports issued yesterday portray a U.S. labor market quickly losing vitality.
According to the government, new claims for state unemployment insurance last week totaled 450,000, a 15 percent increase from the previous week and the highest number in more than nine years.
The private Conference Board said its monthly index of help-wanted advertising in major newspapers dropped to 53, off 32 percent from a year ago, the lowest index reading since 1983.
The index reflects help-wanted advertising in August, so it doesn't reflect the upheaval in employment related to the Sept. 11 attacks. Since the attacks, the aviation industry alone has announced job cuts of more than 100,000.
Conference Board economist Ken Goldstein says the August index number, coupled with the subsequent "souring of consumer attitudes," suggests strongly that the labor market is likely to deteriorate for the next few months.
The unemployment rate rose to 4.9 percent in July. August numbers are scheduled for release next Friday.
Since the attacks, economists have reached a consensus that the economy is in recession. In addition to employment, other reports yesterday from the Commerce Department for housing and industrial demand added to the evidence.
New homes sold in August at an annualized rate of 898,000 were up less than 1 percent from July, according to the Commerce Department. In the same report, the government revised significantly downward the home sale figures previously issued for June and July.
David Seiders, chief economist for the National Association of Home Builders, says the report reflects a slackening demand for new homes. An NAHB survey, following the attacks, of some large home builders suggests customers are following through with previous commitments to buy, but traffic among new shoppers is off sharply.
Seiders is projecting a 5.6 percent decline in the pace of sales in the October-December quarter from the quarter ending this week.
New orders for high-cost manufactured goods slipped 0.3 percent in August, the Commerce department said.
It was the third-consecutive monthly decline, but the smallest of the three declines.
Manufacturing was hit first and hardest when the economic boom began to slow last year. National Association of Manufacturers President Jerry Jasinowski says the report shows orders increasing in August in selected areas, including machinery, communications equipment and semiconductors.