http://biz.yahoo.com/rf/010419/n19511788.html

Thursday April 19, 10:51 am Eastern Time

US 4-wk jobless claims average highest in 5 years

(UPDATE: Adds economist reaction, background)

By Nancy Waitz

WASHINGTON, April 19 (Reuters) - U.S. claims for jobless benefits dropped by 10,000 last week, but a more accurate barometer of labor market trends rose to its highest level in five years, the government said on Thursday.

Initial jobless claims for state unemployment insurance benefits fell to 385,000 in the week ended April 14 from a revised 395,000 in the prior week, the Labor Department said. This, however, was 123,000 more than a year ago.

The closely watched four-week moving average, which irons out weekly fluctuations, rose for the third consecutive week to 382,250 in the week ended April 14 from 381,500 for the previous week. This was its highest level since 388,500 in the week of April 13, 1996.

The jobless statistics, which Federal Reserve Chairman Alan Greenspan received a full 24 hours before they were released to the media, added to a stream of economic reports confirming a foundering U.S. economy.

Cindy Ambler, a spokewoman for the Labor Department, said Greenspan routinely gets the weekly jobless numbers a day ahead of their release, adding the practice had begun several administrations ago.

But the jobless numbers were part of mounting evidence of a slowdown that led Greenspan and his colleagues at the U.S. central bank to cut rates outside the regularly scheduled Federal Open Market Committee meeting, sending financial markets soaring. The Fed on Wednesday cut the fed funds rate a half percentage point to 4.5 percent -- its lowest level in 6-1/2 years -- from 5 percent.

Economists said that while the jobless claims numbers were high, job losses were not rising at a pace indicative of a recession.

``Claims have not jumped up to the level that would signal a recession,'' said Gary Thayer, chief economist for A.G. Edwards and Sons Inc. in St. Louis. ``The report suggests very weak economic conditions, but not declining economic conditions.''

``We think you would have to be consistently above the 400,000 level, up around 450,000 on a consistent basis to reflect a true decline in the economy,'' Thayer added.

The number of new claims was marginally smaller than private economists' forecast for 387,000.

In the April 7 week, the latest week for which data are available, continued claims -- the number of those who have already claimed a week of benefits -- fell to 2,513,000 from a revised 2,560,000.

In a sign the pace of hiring has slowed, the number of continued claims stayed at levels last seen a little more than four years ago when they hit 2,558,000 in early January 1997.

The department said 21 states reported a rise in claims of 1,000 or more in the week ended April 7, led by Illinois. That state reported 5,336 additional claims centered in the autos, construction, service, and other manufacturing industries.

In the same week, no states reported a decrease in claims of 1,000 or more.

-- (M@rket.trends), April 20, 2001