Inflation is low amid growth - but so is hiring

WASHINGTON - The picture of an economy growing modestly without producing inflation yet struggling to create jobs emerged yesterday from several government reports.

The number of newly laid-off workers requesting jobless benefits fell slightly last week for the third straight week. But these initial claims for unemployment benefits remain above levels that would signal net job gains.

New claims dropped 5,000 to a seasonally adjusted 457,000 in the week ended Saturday, the Labor Department said. That nearly matched analysts' estimates of 455,000, according to Thomson Reuters.

The four-week average of jobless claims, which smooths out volatility, dropped to 471,250. Still, the average has increased 30,000 since the start of this year. That has raised concerns among economists that persistent unemployment could weaken the recovery.

The average number of weekly jobless claims remains above the 400,000-to-425,000 level that many economists say it must fall below before widespread new hiring is likely.

Economists at the Federal Reserve Banks of New York and San Francisco predicted yesterday that the labor market would recover from the recession at a "lackluster" pace. Companies will turn to part-time workers before hiring full-timers, they said.

Meanwhile, the Labor Department said yesterday that consumer prices were flat in February. A rise in food prices was offset by a drop in gasoline and other energy costs. Excluding the volatile food and energy categories, the core Consumer Price Index edged up just 0.1 percent last month, matching economists' estimates.

The report adds to evidence that the weak economy has all but erased inflation. That allows the Federal Reserve to continue its efforts to revive the economy by keeping the short-term interest rate it controls at a record low near zero.

In another report, a private research group said its gauge of future economic activity rose just 0.1 percent in February, suggesting slow growth this summer. The gain in the Conference Board's index of leading economic indicators was the smallest in 11 months.

The index is intended to forecast economic activity in the next three to six months based on a variety of economic data.