Jobless claims up, labor market still good

BY

The number of newly laid off people signing up for jobless benefits went up modestly last week.
However, the latest figures suggest employment conditions around the country remain good.

The Labor Department reported Thursday that new applications filed for unemployment insurance
rose by a seasonally adjusted 4,000 to 307,000 for the week ending July 28. That was a better
showing than economists expected; they were forecasting claims to rise to 310,000.

New claims also are lower now than a year ago, when they stood at 315,000.

In another report, U.S. factories saw demand for their products improve in June -- but not as much as some hoped. The Commerce Department said new orders rose 0.6 percent, compared with a 0.5 percent drop in May. Economists, however, were calling for a bigger, 1 percent gain.

Still, the overall gain registered in June did mark the best showing since March.
Looking at the details, demand for "durable" goods, including machinery, airplanes, turbines,
generators and electrical equipment rose by 1.3 percent in June. Orders for durable goods dropped 2.4 percent in May.

Demand for "nondurable" goods, including clothing and meat, poultry and seafood products,
meanwhile, edged down 0.1 percent in June. That compared with a 1.5 percent increase in the
previous month.

A more forward-looking report released by the Institute for Supply Management showed that the
manufacturing sector lost a bit of momentum in July, growing at its slowest pace in four months.
The report is consistent with analysts forecasts that the economy will grow gradually -- but not like gangbusters -- through the rest of this year.

In the layoffs report, the four-week moving average of new claims, which smooths out
week-to-week fluctuations, fell last week by 3,500 to 305,500. That was the lowest level since late May.

Also encouraging: The number of people continuing to collect unemployment benefits sank by 16,000 to 2.5 million for the work week ending July 21, the most recent period for which this
information is available.

Even as economic growth has seesawed, companies have hired at a steady and decent pace.

Economists predict that companies added 135,000 new jobs to their payrolls in July, about the same as the 132,000 positions added in June. The unemployment rate is expected to hold steady at 4.5 percent, relatively low by historical standards. The government releases July s employment report on Friday.

Still, there s been pain from the sour housing market and from the meltdown involving higher-risk
"subprime" mortgages. Affected industries have seen some job losses.

The Federal Reserve meets next week and is widely expected to hold an important interest rate at 5.25 percent, extending a more than yearlong breather for borrowers. Before that, the Fed had
boosted interest rates for two years to fend off inflation.

Fed Chairman Ben Bernanke and his colleagues, however, still believe inflation is a potential threat to the economy. One of the things they are watching closely is whether the sturdy labor market --
which has allowed some workers to command higher wages and benefits -- could add to inflation
pressures.

High gasoline and food prices in recent months, however, have pinched and made some workers
feel that any increases in their paychecks haven t been large enough.

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