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Friday, Jan. 8, 1999

Job cuts show worry in a healthy economy

String of layoffs may signal '99 could be rocky

Associated Press

   WASHINGTON - Amid signs the American economy finished 1998 on a strong note, a jump in unemployment benefit applications and a huge increase in layoff announcements pointed to a weaker economy in the new year.
   "The job indicators are starting to blink big warning signs," said economist Robert Brusca of Nikko Securities Co. International Inc. in New York.
   The number of Americans claiming unemployment checks fell by 22,000 to a seasonally adjusted 350,000 during the week ended Jan. 2, the Labor Department said Thursday. But that only partly reversed a surge of 83,000, the biggest in six years, to 372,000 the week before.
   Claims had fallen to an eight-month low of 289,000 during the week ended Dec. 19.
   Reports from states suggested weather - including flooding in the Northwest - contributed to the big jump during Christmas week. All 12 states registering increases of 6,000 or greater are in the Midwest, Northwest and Northeast. Many cited layoffs in construction.
   But some states also mentioned job losses in manufacturing, which has suffered most of the year from spillover from the world economic slump.
   

Weakening labor market

   A four-week moving average of claims, which smoothes fluctuations, rose by 5,500 to 327,500 last week, the most in a year and a half, excluding June and July when the General Motors strikes swelled unemployment numbers.
   "There are widespread indications that the labor market will weaken further in the months ahead," said economist Gerald D. Cohen of Merrill Lynch.
   The outplacement firm, Challenger, Gray & Christmas Inc., said announced layoffs totaled 103,166 in December, a five-year high and double November's job cuts of 51,642. Fourth-quarter layoff announcements totaled 246,339, the most since the firm began compiling the report in 1989.
   

Retail gains

   Major retail chains said Thursday that deep discounts just before Christmas and right after the holiday lifted retail sales in December to respectable levels following a disappointing start.
   And the Commerce Department said new orders to American factories rose 0.6 percent to a seasonally adjusted $337 billion in November, partly recovering from a sharp 1.7 percent decline the month before.
   It was the fifth increase in six months. But for the first 11 months of the year, factory orders still were only 2 percent higher than the same period of 1997.
   

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