By
The Associated Press
WASHINGTON - New claims for state unemployment insurance plunged last week but still hovered at a level suggesting that employers' demand for workers is easing.
The Labor Department reported Thursday that initial applications for jobless benefits fell by 36,000 to a seasonally adjusted 345,000 for the week ending Jan. 6. A government analyst offered no reason for the decline, which pushed initial claims to their lowest level since the beginning of December.
The more stable four-week moving average of jobless claims, which smoothes out week-to-week volatility, however, rose to 363,000, indicating the labor market has cooled considerably from its red-hot state during the first half of last year.
That increase boosted the moving average to its highest point since July 11, 1998, when claims were at 367,250.
In recent weeks, there's been a spate of troubling economic news. Manufacturing activity has fallen, consumer confidence is down, holiday sales were disappointing and major U.S. companies are laying off thousands of workers.
On Wall Street, stocks were lower in early trading as mixed earnings news from Motorola and Yahoo! dampened investor enthusiasm. The Dow Jones industrial average lost 21 points and the Nasdaq dipped 2 points.
With the economy weakening, analysts expect that job growth will continue to slow and that the nation's unemployment rate, which now stands at 4.0 percent, near a three-decade low, will rise in the coming months.
Worried that the economy is slowing too much and could slip into a recession, the Federal Reserve last week unexpectedly slashed short-term interest rates by half of a percentage point.
But President-elect Bush, who has repeatedly expressed concern about the weakening economy, has said more needs to be done to protect against a serious downturn, notably congressional passage of his $1.3 trillion across-the-board tax-cut package.
In cutting interest rates, the Fed acknowledged that it may have gone too far in reining in economic growth though a series of interest-rate increases between June 1999 and May of 2000.
During that period, the Fed was concerned, among other things, that businesses' strong demand for workers would lead to big increases in wages and benefits, added costs that could be passed along to consumers in sharply higher prices for goods.
For the work week ending Dec. 30, 27 states and territories reported a decrease in new jobless claims, while 25 reported an increase. The information lags a week behind national figures and is not seasonally adjusted.
The state with the biggest decrease was Illinois, down by 9,869. Officials attributed the drop to fewer layoffs in the construction, service and manufacturing industries.
The state with the biggest increase in initial claims was Michigan, up by 27,500. Officials blamed the rise on layoffs in the automobile and transportation industries.
Automobile makers have temporarily shut down plants or cut back on shifts to trim inventories as the slowing economy has cut into demand.
