Rise in New Jobless Claims Is Less Than Was Expected

New claims for unemployment benefits in mid-August held near a two-year low for the second consecutive week, the Labor Department said, offering hope that the nation’s job market is perking up.

The number of claims increased a less than expected 3,000 to 386,000 during the week ended Aug. 22, the department said. Before the previous week, the claims number had not dipped below 400,000 since October, 1990, early in the recession.

“We’re gradually crawling up from the bottom,” said economist David Wyss of DRI-McGraw Hill, a Lexington, Mass., forecasting firm.

A separate report on Americans’ productivity showed the economy struggling.

The productivity of non-farm workers increased at a healthy seasonally adjusted annual rate of 2%, building on an even bigger gain in the first quarter, the Labor Department said.

The 2.0% increase in non-farm productivity during April, May and June, earlier reported as a 2.3% increase, follows a 3.8% increase in January, February and March, the Labor Department said in the report.

But economists said the figure largely reflects employers’ decisions to defer hiring in a soft economy and to work their existing labor force harder.

Wyss and other analysts said Thursday’s jobless claims report is a hopeful sign that the economy, after stalling at midyear, is on an upward path again and that the nation’s unemployment rate may continue to improve.

Despite five consecutive quarters of economic growth through June, the unemployment rate continued to rise, hitting an eight-year high of 7.8% in June.

It edged down to 7.7% in July and economists expect a report being released today to show a further decrease to 7.6% in August.

When claims fell to 383,000 during the week ended Aug. 15 from 474,000 the week before, many analysts were skeptical. They said the big swing might have simply been a rebound from a surge caused by a temporary shutdown at General Motors Corp. factories. But they were reassured that the improvement held during the latest week.

Productivity

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

2nd qtr. 1992: Revised +2.0%

Source: Labor Department