Jobless claims drop for second straight week

Friday, May 31, 2002

WASHINGTON -- For a second straight week, fewer people filed new claims for unemployment insurance, but the level of claims was still high in an indication the job market remains sluggish.

Claims dropped by a seasonally adjusted 12,000 to 410,000 -- the lowest level since the middle of March -- for the week ending May 25, the Labor Department reported Thursday. Claims had fallen by 3,000 in the prior week.

"We're going in the right direction, just way too slow," said economist Clifford Waldman, president of Waldman Associates. He noted that even with the recent declines, claims have remained stubbornly above the 400,000 mark for 10 straight weeks.

On Wall Street, stocks edged down. The Dow Jones industrial average lost 11.35 points to close at 9,911.69.

Although the economic recovery is encouraging some companies to lay off fewer workers, the lingering effects of last year's recession are still evident. The number of unemployed workers continuing to draw jobless benefits rose to 3.89 million for the week ending May 18, suggesting there's not a lot of hiring going on. That was the highest level since Jan. 15, 1983.

The unemployment rate jumped to 6 percent in April -- the highest in nearly eight years -- as jobseekers streamed back into the market faster than companies added new positions.

Many economists predict the unemployment rate will rise as high as 6.5 percent by June.

Companies are worried about the recovery's staying power and are reluctant to quickly hire back workers, crank up spending and make other commitments until they are convinced the turnaround is for real, economists said.

Citing uncertainties about the vitality of the unfolding economic recovery, the Federal Reserve earlier this month decided to leave short-term interest rates unchanged at 40-year lows.

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