Jobless claims at 9-year high

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07/12/2001 - Updated 08:43 AM ET

Jobless claims at 9-year high

WASHINGTON (AP) — New claims for state unemployment insurance jumped last week to the highest level in nine years as companies continued to lay off workers in the face of a struggling economy and the auto industry began its annual plant retoolings.

The number of Americans filing new applications for jobless benefits rose a seasonally adjusted 42,000 to 445,000 for the week ending July 7, the Labor Department reported Thursday.

A government analyst suggested part of the increase came from layoffs in the automobile industry as manufacturers temporarily shut plants to retool assembly lines for new models of cars and trucks. This annual practice generally occurs around this time of year.

The rise in claims left them at the highest level since July 25, 1992, when they stood at 539,000.

The more stable four-week moving average of jobless claims, which smoothes out week-to-week fluctuations, also rose last week to 410,750, the highest point since late June.

In an effort to revive the ailing economy, the Federal Reserve has cut interest rates six times this year.

The economic slowdown has been hard on companies, especially manufacturers and auto makers, struggling with slumping demand. To cope, they have cut production and laid off workers. In June, the unemployment rate rose to 4.5% as businesses slashed payrolls for the second time in three months.

The biggest fear among economists is that the labor market will seriously weaken, causing consumers to curtail their spending and tip the economy into recession.

Most economists believe the April-June quarter will mark the bottom point for the economy since it became stuck in low gear a year ago.

And many economists are hopeful that the Fed's aggressive credit-easing campaign, along with tax-cut refunds of up to $600, will fuel economic growth later this year.

Even if that optimistic forecast proves correct, the unemployment rate, which is a lagging indicator, is expected to top 5% by the end of this year.

-- (M@rket.trends), July 12, 2001


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