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		Home Page Mortgage News You Can Use Jobless Claims in U.S. Fall by 1,000 to 342,000, Close to Three-Year Low Jan. 29 (Bloomberg) -- The number of Americans filing first- time claims for unemployment benefits fell last week, staying close to a three-year low and supporting the Federal Reserve's view that the labor market is on the mend. A slowdown in wages and benefits held labor costs in the fourth quarter to the smallest increase in a year, a Labor Department report showed, underscoring the Fed's statement that it can be ``patient'' before raising interest rates. Initial jobless claims fell by 1,000 last week to 342,000. Claims at the end of last year reached 339,000, the lowest since January 2001. Fed policy makers yesterday said in holding their benchmark interest rate at 1 percent that inflation was ``quite low'' and that statistics such as jobless claims ``suggest an improvement in the labor market.'' While orders have increased at manufacturers encouraging companies to retain workers, hiring has been slow to accelerate. ``Claims are falling but jobs aren't being created,'' said Chris Rupkey, senior financial economist at Bank of Tokyo- Mitsubishi Ltd. in New York. ``In order for the Fed to judge whether or not the expansion is self-sustaining we need to see jobs being created at 200,000-a-month pace.'' The economy has added 278,000 jobs in five months, including a 1,000 increase in December, Labor Department statistics show. More than 250,000 jobs would have to be added each month through September to make up for the more than 2 million jobs lost since President George W. Bush took office four years ago. Veritas ``We are hiring, we are growing and we are optimistic about 2004,'' said Gary Bloom, chief executive officer at Veritas Software Corp., in a televised interview with Bloomberg News. With more than 6,500 employees currently, ``our expectation is to add another couple hundred even in the first quarter here.'' Economists had projected a decline to 340,000 in last week's claims from the initially reported 341,000 the week before, based on the median of 39 forecasts in a Bloomberg New survey. Forecasts ranged from 300,000 to 355,000. U.S. Treasuries fell after the claims report and ahead of the government's auction of $26 billion of two-year notes. The benchmark 10-year note dropped 5/32 point, pushing up the yield 2 basis points to 4.21 percent at 10:18 a.m. New York time. The rise in the employment cost index, a gauge of labor expenses for businesses and government, was the smallest since a similar increase in the final three months of 2002. It climbed 1 percent in the third quarter. Benefit costs rose 1.2 percent from October through December, the smallest since a similar rise in the 2002 third quarter, while wages and salaries edged up 0.5 percent, the government said. The slow recovery in employment has helped restrain labor costs. Sears, Roebuck & Co., which has been unable to raise prices amid increased competition, is among companies that have been trying to trim employment expenses. Salaries and Benefits Employment costs climbed 3.8 percent over the past 12 months, compared with a 3.9 percent gain in the year through the third quarter. Wages and salaries in the fourth quarter were 2.9 percent higher than a year earlier. Salaries for finance, insurance and real estate employees edged up 0.2 percent from October through December after jumping 1 percent in the previous quarter as higher borrowing costs caused refinancing to slow and real estate commissions to wane. Benefit costs -- which include severance, health insurance, vacation pay and referral bonuses -- jumped 6.3 percent over the past 12 months, compared with a rise of 5 percent in the year- earlier period. The increase for all of 2003 was the biggest since 6.7 percent for 1990. Employer costs for benefits account for 30 percent of total compensation outlays. Sears ``Let's face it: Goal No. 1 at most firms right now is keeping a lid on costs, and benefits have been rising,'' said Doug Porter, a senior economist at BMO Nesbitt Burns in Toronto. ``So I think that's been an important factor in keeping companies from hiring more.'' Sears, based in Hoffman Estates, Illinois, the largest U.S. department-store chain, will phase out its pension plan, eliminate most stock options and reduce bonuses to be more competitive with retailers such as Wal-Mart Stores Inc. that offer less costly benefits to employees. The number of people continuing to collect state jobless benefits in the week ended Jan. 17 rose by 11,000 to 3.131 million. The four-week average of continuing claims fell by 40,750 to 3.164 million, the lowest since 3.135 million in the week ended Aug. 25, 2001. Jobless rolls have fallen by 649,000 since reaching a 20- year high of 3.78 million in the week ended June 28, according to Labor Department statistics. Skyworks ``We are adding jobs and we're adding jobs today'' in the U.S., Europe and Asia, said David Aldrich, chief executive officer at Skyworks Solutions Inc. The Woburn, Massachusetts- based company employs 3,800 and makes chips for cellular phones. ``Our order flow right now is very strong, and we're adding, as we need to scale up that capacity.'' The insured employment rate, which tends to track the U.S. jobless rate, held at 2.5 percent in the week before last. The Labor Department said six states and territories reported an increase in new claims while 47 reported a decrease. ``There's been a big drop in people going into the unemployment office, and that usually happens right before hiring starts to spurt,'' said William Ford, chairman of the finance department at Middle Tennessee State University's Jones College of Businesses, who is a former president of the Atlanta Federal Reserve Bank, in an interview yesterday. U.S. payrolls may have expanded by 180,000 this month, based on the median estimate of 17 economists in a Bloomberg New survey. Monthly Jobs Report The Labor Department will report January employment on Feb. 6 and may revise up its estimate of 1,000 new jobs in December, according to economists including James O'Sullivan at UBS Securities LLC and Maria Forres at Griffin Kubik Stephens & Thompson. ``Jobs will depend on how strong volume comes back both globally and in North America,'' said Frederic Poses, chief executive of American Standard Cos., in an interview Monday. ``There may be some early indications that the industrial commercial economy is getting a little stronger, and I think that will be good both for jobs both at American Standard and in general.'' American Standard, based in Piscataway, New Jersey, cut 870 jobs in the fourth quarter. The maker of bathroom fixtures and Trane air conditioners expects sales to rise between 4 percent and 6 percent in 2004. The economy may expand 4.6 percent this year, the fastest in 20 years, based on the average estimate of 54 economists polled by Blue Chip Economic Indicators this month. Gross domestic product may have grown at a 5.0 percent annual rate last quarter, based on the median of 68 forecasts in a Bloomberg News survey. Last Updated: January 29, 2004 11:49 EST   Back to Original Article: Mortgage News You Can Use   Continue with: U.S. Job Market Flashes Mixed Signals DIARY-U.S. Treasuries Fed Holds Interest Rates Steady Stocks Mixed As Investors Seek Bargains About 2 Million to Use Up Jobless Benefits Dollar Surrenders Gains Has global oil production peaked? Most overlooked Tax deductions Saving secrets for a consumer generation The Fed: Patient? Yes. Comfortable? 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