Continuing claims rose to 3.8 million, the highest since the first week of April 1983, from 3.68 million, according to the Labor Department. Initial jobless claims totaled 430,000 last week, higher than the 425,000 median forecast by Bloomberg News analysts.

The "business environment is still very challenged," said Efthimios Sotos, treasurer of Jones Apparel Group Inc., maker of Jones New York clothes and Nine West shoes. "Unemployment still continues to scare people."

U.S. Treasury securities rose amid speculation the economy shows few signs of accelerating to the 3.5 percent rates of growth that economists had predicted in a Bloomberg News survey for the third and fourth quarters. Federal Reserve policy-makers probably will lower interest rates at their June 24-25 meetings to boost growth, economists said.

Central bankers "need to see robust consumption, but they are not getting it, at least not yet," said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa.

The current claims statistics suggest the labor market is still stronger than it was in the early 1980s, when the unemployment rate was above 10 percent. The 3.8 million people collecting benefits represent 2.6 percent of the labor force compared with 3.4 percent in April 1983, when the jobless rate was 10.2 percent. In May of this year, the rate was 6.1 percent.

A separate report from the Commerce Department showed business inventories rose 0.1 percent in April after a 0.3 percent rise in March. The economy and demand need to quicken before corporate managers grow confident enough to start building inventory, economists said.

http://www.detnews.com/2003/business/0306/13/b04-191931.htm