Greenspan: 'More US jobs soon'

President Bush's popularity is at risk without rising employment

US Federal Reserve chairman Alan Greenspan said employment is likely to grow as the economic recovery creates more jobs.

His remarks coincided with data showing new unemployment claims dropped to pre-recession levels.

New unemployment claims for the week to 1 November were down 43,000 to 348,000, a level last seen in early 2001, Labor Department statistics showed.

Investors showed their confidence in the US economy on Thursday by pushing stock markets higher, sending the Nasdaq technology stocks index to its highest close since 17 January 2002 at 1,976.37, up just under 1%.

The recovery in the US - which saw record third quarter growth of more than 7% has not yet created more jobs, in what is known as a "jobless recovery".

'Job revival'

Economists are eagerly awaiting October jobless figures due out Friday which they expect will confirm that US firms are becoming more willing to expand their workforces.

Mr Greenspan lent support to these hopes, saying that the odds "do increasingly favour a revival in job creation".

The US economy has shown signs of a more robust performance recently, with rising growth, stronger consumer spending and increased business investment.

But this has not been matched by growth in employment, leading to fears that the recovery was not sustainable.

"One prominent concern is that, if the labour market remains weak, household confidence could suffer, with detrimental consequences for spending", Mr Greenspan acknowledged.

Mr Greenspan warned that the "relatively optimistic short-term outlook is playing out against a background of growing longer-term concern" about the record US budget deficit.