Massive layoffs apparently over

By Jeannine Aversa
Associated Press

WASHINGTON — New claims for unemployment benefits dropped to a 15-month low last week, suggesting that companies are reducing layoffs. But that doesn't mean there will be a big wave of hiring, economists predicted.

For the week ending June 29, new applications for unemployment insurance fell by a seasonally adjusted 11,000 to 382,000, the Labor Department reported yesterday.

That was the lowest level since March 24, 2001, and the fifth straight week below 400,000. The more stable four-week moving average, which smoothes out weekly fluctuations, dipped to 392,000, the lowest in just more than three months.

Economists viewed the decline as an encouraging sign that the pace of layoffs was stabilizing. But they said it would take time for companies to feel more secure about the economic recovery and step up hiring.

"The drop in claims to a 15-month low says that housecleaning by corporations of excess labor — with the possible exception of telecommunications companies — is over," said economist Clifford Waldman of Waldman Associates, who still found the jobs market "sluggish."

The government will release June's employment report tomorrow and analysts are predicting that the jobless rate will edge up from 5.8 percent to 5.9 percent or even 6 percent.

Analysts estimate that 75,000 jobs were created in June.

The labor market has continued to feel the lingering effects of last year's recession. Companies whose profits took a hit have been wary of making big commitments in hiring and in capital investment.

Yesterday's report showed that the number of unemployed workers continuing to draw jobless benefits rose to 3.7 million, suggesting that not a lot of hiring was going on.