Claims show weaker job market
Continuing jobless claims rise above 3 million
By Rex Nutting, CBS.MarketWatch.com
Last Update: 8:33 AM ET June 3, 2004

WASHINGTON (CBS.MW) - The U.S. labor market weakened slightly in late May, Labor Department figures released Thursday show.

The average number of new weekly seasonally adjusted claims for state unemployment benefits rose by 4,250 to 341,000 in the four weeks ending May 29, after falling to a three-year low two weeks ago.

Seasonally adjusted initial claims in the week ending May 29 fell by 6,000 to 339,000, slightly above the 335,000 expected by economists on Wall Street. It's the lowest level in three weeks. The previous week's figure was revised to 345,000 from 344,000.

The four-week average is considered a more reliable gauge of the labor market than the volatile weekly number, which is subject to distortions caused by holidays, weather and other one-time events. After sinking by 50,000 between September and January, the average number of new claims has bounced in a narrow range between 334,000 and 355,000 for the past three months.

Claims at the current level around 340,000 are consistent with steady but not spectacular job growth of around 150,000 to 200,000 a month, economists say.

In the first four months of the year, the economy has created on average of 217,000 jobs a month.

The Labor Department will report on May nonfarm payrolls on Friday, with about 220,000 net new jobs expected. The unemployment rate is likely to remain at 5.6 percent, the MarketWatch survey of economists says.

Meanwhile, the number of American workers receiving unemployment checks rose by 65,000 to 3 million in the week ending May 22, a five-week high. The four-week average of continuing claims rose by 22,000 to 2.96 million.

The insured unemployment rate rose to 2.4 percent from 2.3 percent.

The continuing claims figures do not include some 15,000 Americans receiving extended federal benefits, which were available to those who had exhausted their 26-weeks of state benefits. The federal program stopped accepting new applicants in January.

Bouts of unemployment have been unusually long during this upswing in the business cycle, a reflection of the intense pressure on businesses to cut labor costs.

In April, 1.8 million of the 8.2 million unemployed Americans had been out of work longer than six months. The average duration of unemployment fell to 19.7 weeks in April.