New Jobless Claims Hit 15-Month Low, Layoff Pace Stabilizing

The Labor Department reported Wednesday that new applications for jobless benefits dropped by a seasonally adjusted 11,000 to 382,000 for the work week ending June 29. That decline pushed claims to their lowest level since March 24, 2001.

It marked the second week in a row in which new claims fell and the fifth straight week that claims were below the 400,000 mark, a level associated with weakness in the jobs market.

In another report, orders to U.S. factories rose by 0.7 percent in May -- the same size increase as the month before and the third month in a row in which factories saw orders grow, the Commerce Department said.

On Wall Street, stocks sagged. The Dow Jones industrial average was off 56 points and the Nasdaq index was down 19 in morning trading.

The increase in factory orders was slightly bigger than the 0.6 percent gain many economists were forecasting and provides further evidence that the nation's manufacturers -- hardest hit by last year's recession -- continue to show improvements.

Computers, machinery and metal products were among the categories posting gains in orders, while cars and household appliances showed declines. Orders for nondurable goods, such as food and clothes, went up 0.4 percent in May, down from a 0.9 percent increase the month before.

In the layoffs report, the new jobless claims figure also was better than some analysts expected. They were forecasting that claims would hold steady from the previous week.

The more stable four-week moving average of claims, which smoothes out weekly fluctuations, dipped last week to 392,000, the lowest level in just over three months.

Even if companies reduce the speed at which they lay off workers, the jobless rate will rise if companies are reluctant to hire employees back.

The government will release June's employment report Friday and many analysts are predicting the jobless rate will edge up to 5.9 percent from the current 5.8 percent rate. That's partly based on the assumption that expected job growth won't be strong enough to prevent the jobless rate from going up. Analysts estimate that around 75,000 jobs were created in June.

As other parts of the economy gain ground, the labor market -- considered a lagging economic indicator -- has continued to feel the lingering effects of last year's recession.

Companies whose profits and revenues took a hit during the slump have been worried about the recovery's staying power and have been wary of making big commitments in hiring and in capital investment.

To this end, Wednesday's report showed that the number of unemployed workers continuing to draw jobless benefits rose to 3.7 million for the week ending June 22, suggesting that not a lot of hiring is going on.

Citing uncertainties about the recovery's vitality, Fed policy-makers left short-term interest rates at 40-year lows last week, the fourth time this year they held rates steady.

The Fed, in a survey of business conditions released in June, said the economic recovery was expanding at a modest pace but that improvements were uneven.

Americans' confidence in the economy, as measured by the Conference Board, fell in June to a four-month low, pulled down by accounting scandals and worries about jobs.

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