New Filings for Jobless Claims Are Unchanged

The number of Americans filing new unemployment claims remained frozen at 421,000 in late August, the government said Thursday. It was seen as a sign that employers, skeptical about whether a recovery has taken hold, are still letting workers go.

There were further signals of economic weakness.

- The Commerce Department cut nearly in half its estimate of what corporate America will spend on plants and equipment this year.

The department said business spending, adjusted for inflation, is expected to rise only 1.6% in 1991 from last year--the weakest showing since 1986, when investment fell by 4.1%. Last spring, the department estimated that business spending would rise 3% this year. Capital spending, after adjusting for inflation, rose 4.5% in 1990.

- The Labor Department reported that the productivity of American workers rose at a mediocre annual rate of 0.5% in the second quarter rather than the 1.9% first reported.

The numbers add up to an economy that has failed to make much headway recovering from the recession, analysts said.

“In past recoveries, ‘shot out of a cannon’ is a typical phrase for describing the economy. What’s happening here is crawling out of a hole,” said Allen Sinai, chief economist at Boston Co.

The jobless claims report may signal equally bleak numbers in today’s unemployment report for August, analysts said.

Most analysts are predicting that the jobless rate will have inched up to 6.9% in August from July’s 6.8%. A separate survey of business establishments, analysts predicted, will probably show that the economy added relatively few jobs last month.

Thursday’s jobless claims report showed that for the week ending Aug. 24, the number of Americans filing new applications for unemployment benefits failed to improve, holding at the 421,000 level of the previous week.

Rather than falling, as would be consistent with a recovery, the jobless claims number has crept up, on average, over the past month, analysts noted.

The latest four-week average of new jobless claims is 420,000. A month ago, it was 406,000.

“The recovery isn’t strong enough, and convincing enough, to employers that they’re willing to go out and add to their labor force. . . . What’s more, they continue to lop off staff,” said Robert Dederick of Northern Trust Co.

Businesses are “keeping costs down by keeping head count down,” Sinai said. “In a weak recovery, business has no other choice if it wants profits to improve.”

Business’ reluctance to hire holds back the recovery by keeping huge numbers of Americans in the unemployment line, analysts said.

If August’s employment numbers are weak enough, the Federal Reserve may lower interest rates in an effort to keep the economy from weakening, analysts said.

Productivity Non-farm business productivity, percent change from previous quarter at annual rate, seasonally adjusted.

2nd quarter, 1991: Revised +0.5%