Jobless Claims Post Decline; Income and Spending Down

The number of U.S. workers filing new claims for unemployment benefits fell last week, but the weak job market continued to pressure incomes and spending in March, government data showed on Thursday.

The Labor Department said initial claims for state unemployment insurance benefits fell to a seasonally adjusted 631,000 in the week to April 25 from 645,000 the prior week.

However, the number of people staying on the benefits roll after drawing an initial week of jobless aid rose by 133,000 to 6.271 million in the week ended April 18, the most recent for which data is available.

It was the 13th consecutive week that continued claims have posted a record and this pushed the insured unemployment rate to 4.7 percent from 4.6 percent the week before, for the highest reading since December 1982.

'The cumulative weight of the evidence over the last several weeks is that the economy is moving closer to a trough,' said David Resler, chief economist at Nomura Securities in New York.

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'I don't know that we're there yet, but I think we're in the vicinity of the low point and beyond that lies a very sluggish and hesitant recovery, but nonetheless a period of expanding activity instead of contracting activity,' he said.

Analysts are monitoring the trend in jobless claims for hints on when the recession may end.

Since it started in December 2007, over 5 million U.S. jobs have vanished.

Shrinking payrolls and falling asset prices are also putting a squeeze on incomes and eroding spending.

A separate report from the Commerce Department showed consumer spending fell 0.2 percent in March after a 0.4 percent increase in February, initially reported as a 0.2 percent rise.

Spending, which accounts for over two-thirds of U.S. economic activity, had also risen in January.

The data was incorporated in the report for first-quarter U.S. gross domestic product released on Wednesday, which showed consumer spending rebounded 2.2 percent in the first three months of the year after sinking in the last half of 2008.

Personal income slipped 0.3 percent after declining 0.2 percent in February, the Commerce Department said. Personal income has declined in five of the last six months.

Savings increased to an annual rate of $455.3 billion. The savings rate climbed to 4.2 percent in March from 4 percent in February.

Inflation was moderate in March, with the personal consumption expenditures price index, excluding food and energy, steady at 1.8 percent on a year-over-year basis for the second month in a row.

In another report, the Labor Department said employment costs rose by the lowest amount on record in the first quarter.

The department's Employment Cost Index, a broad measure of wages and benefits, rose 0.3 percent between January and March following a 0.6 percent rise in the last quarter of 2008.

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