Jobless Claims Post Biggest Dip in 2 1/2 Years... Leading Indicators Gauge Climbs in June
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Jobless Claims Post Biggest Dip in 2 1/2 Years

WASHINGTON - The number of Americans filing new claims for unemployment benefits plunged by the largest amount in 2 1/2 years last week, reflecting a slowdown in layoffs in the auto industry.

The Labor Department reported that new benefit claims dropped by 34,000 to a new total of 303,000 as the labor market continued to signal strength.

Government analysts attributed the big improvement to a slowdown in layoffs in the auto industry, which had seen big increases in recent weeks as auto plants shut down temporarily to retool for the new model year.

Federal Reserve Chairman Alan Greenspan, delivering a monetary report to Congress this week, said the U.S. economy, after a brief slowdown in the spring, has picked up strength over the past two months and should enjoy solid growth this year.

Greenspan cautioned that the growth forecasts could be derailed by a variety of potential threats from a surge in energy costs to home prices that he said had reached unsustainable levels in some parts of the country.

The strong economic growth this year has helped to boost job creation. The nation's unemployment rate has fallen to 5 percent, the lowest point in nearly four years.

The performance of jobless claims last week was further evidence that labor markets are continuing to improve.

The drop of 34,000 was the largest one-week improvement since a decline of 35,000 in the week of Dec. 21, 2002. The decline was more than triple the 10,000 drop that private analysts had been predicting.

The total of 303,000 claims last week was the lowest level in 16 weeks. The four-week moving average, which helps smooth out weekly volatility, also declined last week to 318,000, the lowest level in more than four months.

News Max.com ~ Associated Press ** Jobless Claims Post Biggest Dip in 2 1/2 Years

Leading Indicators Gauge Climbs in June

NEW YORK - An important gauge of future economic activity rose strongly in June, but economists expressed concern that weaknesses were developing in the nation's industrial sector.

The New York-based Conference Board said its Composite Index of Leading Economic Indicators rose 0.9 percent in June to 137.7 after showing no change the month before and a 0.2 percent rise in April.

The June increase was the largest since a 0.9 percent rise in December 2003, the board said. The figures were based on revised calculations of the index, which is closely watched as a signal of growth in the U.S. economy over the next six months.

The latest figures incorporate two revisions - a statistical trend adjustment as well as a new way of accounting for the yield spread, a component of the index that measures the difference between the yield on the 10-year Treasury note and the federal funds rate.

The last time the gauge underwent a major revision was in 1996, shortly after the Conference Board, an industry-backed research group, took over calculating the index from the Commerce Department in Washington, D.C.

Without the revisions, the index of leading indicators would have shown an increase of 0.5 percent in June following a dip of 0.2 percent in May, the Conference Board said.

Gail D. Fosler, the board's chief economist, told reporters that despite the strong June reading, she had concerns about the economy's strength.

"We believe the industrial economy is slowing down, that it is slowing down quite quickly," Fosler said. She said, however, that she did not believe a recession was in the offing, saying "we are way far away from anything that looks like a recession signal."

Instead, she said the nation's economy was likely to show growth of about 3.6 percent this year and slow to 3.1 percent in 2006.

Seven of the 10 indicators that make up the leading index increased in June: consumer expectations, vendor performance, the money supply, a decline in unemployment claims, the interest rate spread, stock prices and building permits. One component, manufacturers' new orders for nondefense products, declined, while weekly manufacturing hours and manufacturers' new orders for consumer goods were unchanged.

The index of coincident indicators, which measures current economic activity, rose 0.2 percent in June to 120.5 after increasing 0.1 percent in May to 120.2.

The index of lagging indicators, a measure of past economic performance, was up 0.3 percent in June to 119.7 after advancing 0.4 percent in May to 119.4.

News Max.com ~ Associated Press ** Leading Indicators Gauge Climbs in June