Friday, August 21, 2009

The index of U.S. leading economic indicators increased in July for the fourth month in a row, providing further evidence that the longest postwar recession may be ending soon.

However, first-time claims for unemployment benefits unexpectedly jumped last week, rising for the second week in a row and suggesting that businesses have not completed their extraordinary cost-cutting measures.

Leading indicators increased 0.6 percent last month after rising an upwardly revised 0.8 percent in June, which followed robust jumps of 1.1 percent in April and 1.2 percent in May, the Conference Board reported Thursday. The index, which forecasts economic activity three to six months in advance, had not risen four months in a row since 2004.

“The indicators suggest that the recession is bottoming out and that economic activity will likely begin recovering soon,” said Kenneth Goldstein, an economist at the Conference Board, a private economic research organization based in New York.

A separate report, issued Thursday by the Federal Reserve Bank of Philadelphia, revealed that manufacturing activity unexpectedly expanded in August in the Philadelphia region, signaling a recovery on the horizon.

On the labor front, however, initial jobless claims increased last week by 15,000 to 576,000, the Labor Department reported Thursday. The four-week moving average, which smooths weekly data, also increased, rising 4,250 to 565,750. Continuing claims for unemployment benefits increased by 2,000 to 6.241 million for the week ending Aug. 8.

“One week does not make a trend, but if this latest increase is any indication, layoffs may not be moderating as quickly as previously thought,” said Andrew Gledhill, an economist at Moody’s

Initial claims have come down from their March peak of 674,000.

“To reach a stable labor market, claims will have to reach around 350,000,” Mr. Gledhill said.

Unemployed workers who exhaust their regular state benefits, which usually last 26 weeks, can seek benefits from the Extended Benefits program and the Emergency Unemployment Compensation (EUC) program, both of which are financed by the federal government.

The number of jobless workers receiving extended benefits declined by 48,000 to 400,000 for the week ended Aug. 1, but those participating in the EUC program jumped by 92,000 to 2.9 million.

Altogether, more than 10 million workers were claiming jobless benefits in early August. Since the recession began in December 2007, employers have reduced payrolls by 6.7 million, the biggest loss of jobs since the Great Depression.

The unemployment rate in July was 9.4 percent, double the rate of 4.7 percent one month before the recession began. The Labor Department reported earlier this month that 14.5 million people were unemployed in July.

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