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Jobless claims fall to lowest level in a month

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The number of newly laid-off workers filing for unemployment benefits fell 9,000 from the week ending May 16 to the week ending May 23, totaling 365,000. Economists had expected a slight increase.

However, the four-week average for claims increased slightly to 372,250; the average was around 300,000 one year ago. And a rise in claims is predicted in the coming weeks as the economy faces problems such as soaring gasoline prices and a severe credit crunch.

Speaking to USA Today, Ian Shepherdson, chief U.S. economist at High Frequency Economics, Valhalla, N.Y., says: "During the next few months, claims should climb toward the 400,000 mark as companies seek to control costs in the face of persistent soft demand."

For the fourth straight week, the number of jobless claims was above the 3 million mark for the week ending May 10; that level of continuing claims has not occurred since 2004.

The Federal Reserve predicts the unemployment rate will rise from the current 5 percent to between 5.5 percent and 5.7 percent by the end of this year. In addition, it predicts overall economic growth will be between 0.3 percent and 1.2 percent this year, which is lower than its January forecast of 1.3 percent to 2 percent.

Although some analysts fear the U.S. is in a recession, the Bush administration maintains that things will pick up when people start spending their economic stimulus tax rebate checks.

The report for the week ending May 10 showed 31 states and territories experienced a decline in unemployment applications and 22 experienced increases. Michigan had the largest increase at 6,637, which was attributed to job losses in the auto industry. The largest decrease in unemployment applications was 15,244 in New York, which was attributed to fewer layoffs in the transportation and service industries.


5/23/2008

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