n Volume of unemployment benefits increases concerns about the labor market.
By CHRISTOPHER S. RUGABER
The Associated Press
WASHINGTON – The economy is sending a message of hope laced with caution: That the recession is steadily easing, but new threats could delay any recovery.
One piece of heartening news was that the number of people seeking first-time jobless aid fell last week, a sign companies are cutting fewer workers.
And even though sales of newly built homes were flat last month, the figures suggested that the battered U.S. real estate market is nearing a gradual comeback.
But pessimists could point to bleaker news Thursday: The number of people continuing to receive unemployment benefits rose to 6.78 million – the largest total on records dating to 1967 and the 17th straight record-high week.
The figure signaled that the jobless rate, which reached 8.9 percent in April, will rise in May, economists said. And many economists expect the rate to approach 10 percent by year’s end.
Another worrisome sign is that a record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit, the Mortgage Bankers Association said. And the wave of foreclosures isn’t expected to crest until the end of next year.
In addition, long-term interest rates are rising in the credit markets and taking mortgage rates with them. That’s raising anxiety about an economic recovery and making consumers think even harder about buying homes or refinancing their current mortgages.
The tally of newly laid-off workers filing initial claims for unemployment insurance fell last week to 623,000, the Labor Department said, from the previous week’s revised figure of 636,000 and below analysts’ expectations.
Turning the corner
The drop extended a downward trend that began in late March, when claims reached a peak for the current recession of 674,000. The drop since then indicates that companies are cutting fewer jobs, economists said, and is a sign that the recession is bottoming out.
“The unemployment claims have turned the corner,” said Kurt Karl, the New York-based chief U.S. economist at Swiss Re.
Auto-related layoffs had elevated the jobless claims numbers in recent weeks, but a Labor Department analyst said no states reported that their claims figures were affected by job cuts in that sector last week.
In a separate report, the government said demand for big-ticket manufactured goods jumped by 1.9 percent in April, the largest amount in 16 months.
In addition, the report showed that business orders for machinery, communications equipment and other capital goods fell by 1.5 percent, indicating companies are still reluctant to buy new equipment.
Still, orders for durable goods have risen in two of the past three months. That’s a contrast from last winter, when they plummeted 7.8 percent in January and 4.6 percent in December.