Jobless data offer a sign for optimism
Fewer people signed up for jobless benefits last week, an encouraging sign that most companies aren’t resorting to large-scale layoffs as the country copes with continuing problems in the housing and credit markets.
The Labor Department reported Wednesday that new applications filed for unemployment insurance dropped by a seasonally adjusted 11,000 to 330,000 for the week ended Nov. 17. It was the lowest level since the beginning of November. The 330,000 level of claims was in line with economists’ forecasts.
A year earlier, new claims for unemployment insurance stood at 322,000.
The four-week moving average of claims, which smooths out week-to-week volatility, dipped last week to 329,750, a decrease of 750 from the previous week. It marked the lowest level since late October. A year earlier, the four-week average of claims was 319,500.
“We continue to believe that most statistical and anecdotal evidence continue to point to a relatively healthy labor market,” said Omair Sharif, an economist at RBS Greenwich Capital.
In other economic news, a gauge of future business activity suggested that the economy’s growth in the months ahead could slow even more than anticipated. The Conference Board reported that its index of leading indicators fell 0.5% in October, after ticking up 0.1% in September.
The jobless report also showed that the number of people continuing to collect unemployment benefits rose by 7,000 to 2.57 million for the week ended Nov. 10, the most recent period for which that information is available. A year earlier, continuing claims stood at 2.43 million.
The White House hailed the new report on employment activity.
“The fact that we’re seeing relatively strong job creation and solid wage growth is helpful. This is a fairly resilient, flexible economy that has shown an ability to withstand shocks,” said Tony Fratto, White House deputy press secretary.
But on Wall Street, the jobless report failed to ease investors’ anxieties about repercussions from the housing collapse. The Dow Jones industrial average fell 211.10 points, or 1.6%, to 12,799.04.
The nation’s employment climate is a crucial factor in determining whether the economy will weather the stresses from the housing slump and credit crunch.
Decent job creation and wage growth have helped to offset some of the negative forces hitting some people, including weaker home values and hard-to-get credit.
The national civilian unemployment rate -- now at 4.7% of the labor force -- is considered low by historical standards. The jobless rate is expected to climb slowly in the coming months as the economy loses steam.
Even though the labor market has been holding up fairly well to stresses in the economy, job losses have been painfully felt in construction, manufacturing, mortgage banking and other businesses more closely linked to the troubled housing and credit sectors.
The economy, which grew at a brisk 3.9% pace in the third quarter, is expected to log growth at only half that rate or less in the final three months of this year, analysts say.
The Federal Reserve, in the first of new quarterly reports to the nation, said it believed that the unemployment rate would rise to 4.8% to 4.9% next year. For all of last year, the jobless rate dipped to 4.6%, a six-year low.
The Fed said the “unemployment rate would increase modestly” in 2008, stabilize in 2009 and then decline slightly in 2010.
To combat the troubles in the economy, the Federal Reserve has sliced interest rates twice this year -- in September and October. That dropped the Fed’s key interest rate to 4.5%. The decision to cut rates in late October was a “close call,” according to minutes of that closed-door meeting released Tuesday. At the time, Chairman Ben S. Bernanke and his colleagues hinted that the Fed might not need to lower rates again.
Against that backdrop, the Fed is likely to leave rates alone when it meets Dec. 11. Some investors and analysts, however, believe a third rate reduction will be needed then to help energize the economy.
