U.S. Jobless Claims Fall But So Does Manufacturing

ByJohn S. McClenahen Both economic optimists and economic pessimists can find supporting numbers among the slew of official statistics that poured out of Washington, D.C., on May 15. Initial claims for unemployment insurance, a closely watched weekly indicator of U.S. job market health, fell to 417,000 last week, a decrease of 13,000 from the previous week's revised figure of 430,000, the U.S. Labor Department reported. In another encouraging sign, the department's four-week moving average for claims also declined, dropping to 439,750 from the previous week's revised average of 447,250. However, the most recent claims numbers remain well above 400,000, suggesting few new jobs are being created. Indeed, the number of people continuing to receive unemployment insurance benefits was 3.77 million during the week ending May 3, an increase of 120,000 from the previous week's figure of 3.65 million. Meanwhile, U.S. manufacturing production fell 0.6% in April, its third consecutive monthly decline of the year, the Federal Reserve reported. U.S. industrial production, which includes mining and utilities as well as manufacturing, declined 0.5% last month. "April was a complete disaster for the manufacturing industry," says Daniel J. Meckstroth, chief economist at Manufacturers Alliance/MAPI, an Arlington, Va.-based business policy and research group. "The double-dip recession in manufacturing has taken its toll on jobs and left in its wake underused factories in virtually every goods-producing industry." Capacity utilization in manufacturing in April was 72.5%, the lowest since May 1983. The Labor Department's producer price index (PPI) for finished goods declined 1.9% in April after three straight months of increases of at least 1%. The so-called core PPI, the main index stripped of price changes for food and energy, fell 0.9% in April. That could heighten concerns about deflation. But, "the extreme volatility in core finished goods prices in recent months makes reading the trend difficult," says Maury Harris, chief U.S. economist at UBS Warburg, New York. "On average, though, core prices have been close to flat, i.e., weak, but not necessarily getting weaker."