First-time claims for jobless benefits fell more than expected last week, evidence that companies are laying off fewer workers as the economy improves.
The Labor Department says initial claims for unemployment insurance fell to a seasonally adjusted 550,000 from an upwardly revised 576,000 in the previous week. Analysts expected claims to drop to 560,000, according to Thomson Reuters.
The number of people continuing to receive benefits fell by 159,000 to nearly 6.1 million, the lowest level since early April.
Still, the figures remain significantly above levels associated with a healthy economy and indicate that jobs remain scarce.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) — The
recession is ending and the economy is finally growing again.
That's the message implicit in the Federal Reserve's latest survey of businesses around the country, which found economic activity stabilizing or improving in most regions.
Economists warn the expansion is fragile and will have staying power only if consumers start spending more money. Rising unemployment that keeps Americans cautious could make for a plodding recovery in the months ahead.
The Labor Department will report on Thursday the number of new jobless claims filed last week, which could indicate whether the incipient recovery is slowing the pace of layoffs.
Wall Street economists expect that first-time claims for unemployment insurance benefits fell to a seasonally adjusted 560,000 from 570,000 the previous week, according to a survey by Thomson Reuters.
Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies' willingness to hire new workers.
While the figures are volatile, first-time claims have trended downward in recent months. Initial claims topped 600,000 for most of this year, until falling below that level in early July.
The total number of people receiving benefits, meanwhile, is expected to drop by about 30,000 to 6.2 million. The figures on so-called continuing claims lag initial claims by a week.
All but one of the Fed's 12 regions, meanwhile, indicated economic activity either was "stable," showed "signs of stabilization" or had "firmed," according to the Fed's survey. The one exception was the St. Louis region, which reported the economic decline is "moderating."
Businesses in most Fed regions said they were "cautiously positive" about the economic road ahead. The survey, known as the Beige Book, does not include precise figures.
Analysts predict the economy is growing in the current quarter, which ends Sept. 30, at an annual rate of 3 percent to 4 percent. That's mostly because businesses, which had slashed investments during the
recession, are spending more.
Auto sales have been lifted by the government's recently ended Cash for Clunkers program. Manufacturing and the battered housing market, which led the country into
recession when it collapsed, have also shown signs of improvement.
The problem for the economy is that the expected growth this quarter comes mainly from the auto companies and other manufacturers, which are refilling their depleted stockpiles.
Those inventories had dwindled as factories and retailers sought to bring what they had more in line with reduced sales. Any robust growth in the economy might be short-lived if shoppers don't step up their spending.
In the Fed survey, most regions of the country reported that the clunkers program had boosted sales. Other merchants struggled. And consumer spending remained soft in most places.
Still, the assessments of businesses on the front lines of the economy were brighter than those they provided for the last edition of the Fed survey in late July.
At that time, most regions of the country reflected only that the
recession was easing its grip. "That's a pretty significant change in tone from the previous Fed report," said Brian Bethune, economist at IHS Global Insight.
The survey's findings will figure into discussions when Fed Chairman Ben Bernanke and his colleagues meet Sept. 22-23. The Fed is expected to keep interest rates at record lows, probably for some time, to help nurture the recovery.
"There are presently some signs that the economy is stabilizing and even reviving in certain areas, despite mixed signals," Richard Fisher, president of the
Federal Reserve Bank of Dallas, said in a speech in Texas.
There was plenty of bad news in the survey. In the commercial real estate market, demand stayed weak, and construction fell in all parts of the country. And the job market was still sickly all over the nation.
The nation's unemployment rate, which stood at 9.7 percent in August, could top 10 percent this year. Fisher, of the Dallas Fed, called for "uncomfortably high unemployment" as businesses keep cutting costs.
