ECONOMY Unemployment claims fall to 4-year low
Another report showed the Leading Economic Indicators dropped.
NEW YORK (AP) -- The number of Americans filing new claims for unemployment benefits fell to the lowest level in more than four years, backing up Federal Reserve Chairman Alan Greenspan's assertion that the economy is in good shape.
Some 302,000 Americans filed applications for jobless benefits last week, a drop of 2,000 from the previous week on a seasonally adjusted basis and the third weekly decline in a row, the Labor Department said Thursday. The level was the lowest since Oct. 28, 2000, in the closing months of the country's record 10-year long economic expansion.
A separate report from the Conference Board, a business-financed research group, showed that its Index of Leading Economic Indicators slipped 0.3 percent in January, to 115.6. But that decline, which followed two months of increases, could be linked to unusual recent movements in interest rates.
The Labor Department also said Thursday that prices for imported goods rose 0.9 percent in January as foreign petroleum prices jumped 4.6 percent and the price of non-petroleum imports edged up 0.2 percent. Import prices are expected to continue rising this year as the weaker dollar makes foreign products more expensive for American consumers.
Still, Greenspan, in a second day of testimony before Congress, repeated that he believed the nation's "economic fundamentals have steadied ... with inflation and inflation expectations well-anchored."
The decline in jobless claims caught analysts by surprise. They had been forecasting an increase of around 12,000, reflecting an anticipated bounce after impressive declines of 9,000 and 12,000 in the previous two weeks.
Most economists expect the U.S. economy to grow at least 3 percent this year, down from the strong 4.4 percent registered in 2004 but a still very-respectable pace.
Scott Anderson, senior economist at Wells Fargo & amp; Co., which is based in San Francisco, said the improvement in unemployment claims indicated there was "better traction in the labor market" with more companies hiring.
He said that lower productivity growth in recent quarters suggested that companies "may need to add workers or another line on the manufacturing floor" to increase their output.
In afternoon trading, the Dow Jones industrial average fell 41.46, or 0.4 percent, to 10,792.75. The Standard & amp; Poor's 500 index slipped 5.38, or 0.4 percent, to 1,204.96, while the Nasdaq composite index fell 14.67, or 0.7 percent, to 2,072.76.
The Conference Board's report said that January's decline in the leading indicators index followed a revised rise of 0.3 percent to 115.9 in December and 0.3 percent to 115.5 in November. Before November and December, the index had fallen for five consecutive months, though the declines were modest.
Anderson said the leading indicators may be getting "some false signals" from the narrow spread between long- and short-term rates, one of the index's components.
The index is designed to predict economic activity over the next three to six months.
Ken Goldstein, a Conference Board economist, said in a statement accompanying the report that the economic picture "is positive, but more spotty than robust."
He added: "The spike in energy prices and the lower dollar took some steam out of the economy. But the larger concern remains cautious attitudes. Business concerns about the direction of cash flow could lead to cautious decisions about hiring and rebuilding inventories."
The Conference Board report said that five of the 10 indicators that make up the leading index contributed to January's decline -- vendor performance, consumer expectations, stock prices, the interest-rate spread, and manufacturers' new orders for consumer goods and materials. Four were up -- average weekly manufacturing hours, the money supply, building permits and new orders for nondefense capital goods. Claims for unemployment insurance were unchanged.