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ECONOMY: Job-loss data feed optimism
Economists look for hiring follow-through
Michael E. Kanell - Staff
Friday, January 30, 2004

About 342,000 Americans last week filed for new unemployment benefits, a sign that job losses continue to run at moderate levels --- though far below the summer's hemorrhaging.

New claims averaged 346,000 for the past four weeks, a level that should indicate solid improvement in the labor market from last summer, when weekly claims were running well over 400,000.

But if layoffs are falling, then hiring should be picking up, most economists believe. Thursday's report from the Labor Department fed expectations that next Friday's payrolls report will show healthy job growth.

Economy.com on Thursday predicted gains averaging 124,000 a month for the first three months of 2004. Even more optimistically, economist Andrew Tilton of Goldman Sachs thinks January's report will show 225,000 more jobs.

But high expectations have been wrong before: Despite elevated hopes, December's payrolls showed minuscule expansion of just 1,000 new jobs.

"The U.S. economy is under attack from global competition," said economist Campbell Harvey at Duke University's Fuqua School of Business. "Business is hesitant to hire back in large numbers. This is the key difference between this recovery and previous recoveries."

About 150,000 new jobs a month are needed to soak up the pool of the jobless. Most recoveries have spurred robust hiring of 200,000 or more new jobs each month. Payrolls the past five months have grown a total of 278,000.

Get used to it, Harvey said. "We are going to see very slow growth in terms of jobs. I expect we will be in the range between 1,000 and 150,000 for the next six months."

In another sign of sluggish hiring, the Conference Board's help-wanted index unexpectedly reversed field and dipped slightly, the board announced Thursday. The index still has not returned to its post-recession level of two years ago.

Yet most other clues are optimistic. Profits are booming, and domestic product has been strong. And layoffs in November were down 14 percent from a year earlier, according to a survey released Thursday by the Bureau of Labor Statistics. Job openings increased 2 percent, the BLS said.


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