Worker layoffs fall to lowest level in six months

Associated Press

WASHINGTON — A key gauge of the number of Americans losing their jobs fell to its lowest level in six months, a sign that the country may be pulling out of a recession.

The average number of newly laid off workers over the last four weeks sank to a seasonally adjusted 376,000 last week, the Labor Department reported Thursday.

Because the department’s four-week moving average of new claims smoothes out week-to-week fluctuations, economists consider it a good barometer of labor market activity.

The latest jobless figures — along with other recent economic data — "say that the economy has turned a corner and is recovering. The only issue is the strength of that recovery," said economist Clifford Waldman of Waldman Associates.

Still, economists warned that the country is in for a period of rising unemployment. Even if companies reduce the speed at which they lay off employees, the jobless rate will keep rising if companies are reluctant to hire workers back.

That’s certainly the expectation for Washington state, which releases its unemployment numbers on Tuesday. Last week’s decline pushed the moving average of new claims down to its lowest level since Aug. 11, when claims stood at 372,000.

At that time, economists thought the economy, which had been stuck in a yearlong slump, was beginning to show tentative signs of a revival. But the economy was dealt a considerable setback by the Sept. 11 terrorist attacks, which jolted already fragile consumer confidence, disrupted business nationwide and caused layoffs to rocket.

To prop up the economy, which slid into recession in March, the Federal Reserve slashed interest rates 11 times last year, pushing the prime lending rate — a benchmark for many consumer and business loans — down to its lowest level since late 1965.

The Fed last month opted to leave interest rates unchanged and cited signs of a recovery as the reason. Many economists believe the Fed’s aggressive rate-cutting action will pave the way for a solid rebound in the second half of this year.

Recent economic reports suggest the worst may be over for the nation’s manufacturers, which have been hardest hit by the economic slump. Manufacturing activity has edged higher and factories are seeing more demand for costly big-ticket goods.

To cope with the slowdown, companies have sharply cut production and capital spending and let workers go.