WASHINGTON - The number of new people signing up for unemployment benefits rose last week. But even with the increase, claims still are hovering at a level that points to a recovery in the job market.
The Labor Department reported yesterday that new applications for unemployment insurance increased by a seasonally adjusted 12,000 to 352,000 for the week ending June 5.
Although the increase in filings comes after two straight weeks of declines, the 352,000 level of claims is well below the 424,000 filed for the same week a year ago, showing that the layoff picture has improved considerably from last year.
Economists were expecting claims to fall last week. Filings for last week, however, covered the period including the Memorial Day holiday, a time — as in all holiday weeks — that can present difficulties adjusting the data for seasonal factors, a Labor Department analyst said.
The number of people who have been drawing unemployment insurance fell by 106,000 to 2.88 million for the week ending May 29, the most recent period for which that information is available.
"This provides some confirmation that hiring has picked up, so that those receiving jobless benefits are finding work more quickly and dropping out of the tally," said Steven Stanley, chief economist at RBS Greenwich Capital.
The news boosted Wall Street's confidence in the economy yesterday, lifting stocks moderately higher and giving the major indexes a gain for the shortened trading week.
Separately, the Federal Reserve reported yesterday that U.S. households saw their net worth in the first quarter of this year rise to a record $45.15 trillion, reflecting in part higher home and other real-estate values. The first-quarter's net worth figure surpassed the previous all-time high registered in the fourth quarter of 2003.
With the economy growing and the labor market in recovery, economists widely expect the Federal Reserve will boost short-term interest rates for the first time in four years at its next meeting on June 29-30. Most economists are expecting a one-quarter percentage point increase.
Fed Chairman Alan Greenspan, in a speech Tuesday, said although he still expects the Fed will be able to push interest rates up gradually to combat inflation, policy-makers are prepared to take more aggressive action should the inflation outlook turn worse than they now expect.
The labor market, which had been stuck in the doldrums over the last three years, has been showing strong signs recently that it is getting back in the groove.
Greenspan, in his remarks Tuesday, welcomed the recent, sizable increases in the nation's payrolls. In May, the economy added 248,000 jobs.
"The exceptional reluctance to expand payrolls also appears to have waned this year and businesses are once again hiring with some vigor," he said. Still, the Fed chairman said companies' use of temporary workers suggests continuing wariness on the part of businesses about the sturdiness of the recovery.
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