Jobless claims up, but labor market OK By JEANNINE AVERSA, AP Economics Writer

Jobless claims up, but labor market OK By JEANNINE AVERSA, AP Economics Writer
1 hour, 39 minutes ago



WASHINGTON - The number of newly laid off people signing up for jobless benefits rose modestly last week, although the latest figures suggest employment conditions are good.

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The Labor Department reported Thursday that new applications filed for unemployment insurance increased by a seasonally adjusted 4,000 to 307,000 for the week ending July 28. That was a better than the 310,000 that economists expected.

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 were calling for a bigger, 1 percent gain.

Still, the overall gain in June did mark the best showing since March.

For the economy, the latest batch of reports suggests "it is sort of steady as she goes despite this financial market hoo-ha," said Bill Cheney, chief economist at John Hancock Financial Services, referring to the recent turbulence on Wall Street. "It really seems like the underlying economic reality is much more placid."

The fresh economic news helped to soothe investors and give stocks a lift. The Dow Jones industrials gained 100.96 points to close at 13,463.33.

Looking at the details in the manufacturing report, demand for durable goods, including machinery, airplanes, turbines, generators and electrical equipment rose by 1.3 percent in June. Orders for such goods dropped 2.4 percent in May.

"The production pipeline is still full and the inventory overhang, which slowed manufacturing earlier this year, seems to be behind us," said Tim Quinlan, economic analyst at Wachovia, pointing to some positives in the report.

Demand for nondurable goods, including clothing and meat, poultry and seafood products, fell by 0.1 percent in June after a 1.5 percent increase the previous month.

A more forward-looking report released by the Institute for Supply Management showed that the manufacturing sector lost momentum in July and grew at the slowest pace in four months. The report is consistent with analysts' forecasts that the economy will grow gradually 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.

The number of people continuing to collect unemployment benefits dropped 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 was to release July's employment report on Friday.

Still, there has 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, which meets next week, is 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 have made some workers feel that any increases in their paychecks have not been large enough.

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On the Net:

Unemployment initial claims: http://www.dol.gov

Factory orders: http://www.census.gov/indicator/www/m3/index.htm