WASHINGTON – New claims for unemployment insurance shot up last week to their second-highest level of this year, a fresh sign of the difficulties facing workers as companies, trying to cope with a listless economy, seek leaner work forces.
The Labor Department reported Thursday that new applications for jobless benefits rose by a seasonally adjusted 30,000 to 442,000 for the work week ending April 12.
That increase pushed claims to their highest point since March 29, when claims hit 443,000, the highest level of the year.
For nine straight weeks, claims have been above the 400,000 mark, a level associated with a stagnant job market. Thursday's figures were weaker than economists were expecting.
Some of the rise in claims last week was attributed to layoffs in the automobile industry, a Labor Department analyst said.
Businesses have been struggling with lackluster profits and uneven demand from customers. Against that backdrop, companies have been reluctant to increase capital spending and go on a hiring spree, major forces restraining the economy's recovery.
The more stable, four-week moving average of initial jobless claims also rose last week by 3,500 to 424,750, the highest level in nearly a year.
Economists believe the nation's unemployment rate -- now at 5.8 percent -- is likely to rise in the months ahead.
Federal Reserve Chairman Alan Greenspan and his colleagues are hopeful that once the war in Iraq is over, the economy will return to good health.
But even if the economy starts improving a bit later this year, the jobless rate probably will creep up because job growth won't be strong enough to accommodate the expectation that an improved climate will attract a lot more job seekers.
The number of unemployed people continuing to draw jobless benefits went up by 76,000 to 3.57 million for the week ending April 5, the most recent period for which this information is available. That marked the highest level in continuing jobless claims since Nov. 9, 2002.
Economists don't expect companies to step up hiring or capital investment until they feel secure about the economy, their profits and customer demand.
After sliding into recession in 2001, the economy has been struggling to get back on firm footing. The economy's growth, however, has been characterized by a jagged pattern, where a quarter of strength is followed by a quarter of weakness.
That climate -- along with uncertainties surrounding the war with Iraq -- gave already cautious businesses another reason to clamp down on spending and investment.
The Federal Reserve decided in March to hold the federal funds rate at 1.25 percent, a 41-year low, with the hope that will spur more spending and investment and help along the economy. The funds rate is the Fed's main lever to influence economic activity.
President Bush, recognizing congressional skepticism over the size of his original economic stimulus proposal for a $726 billion tax cut, is now calling for $550 billion worth of reductions over 10 years.