New claims for unemployment benefits fall
The number of people who filed new claims for state unemployment benefits fell 11,000 to 445,000 in the latest week, the lowest level since early July, the U.S. Labor Department reported Thursday.
Economists polled by MarketWatch had expected initial claims to rise to a seasonally adjusted 455,000 in the week that ended Oct. 2. Claims for last week were revised higher by 3,000 to 456,000.
New applications for jobless benefits have dropped almost 10% after surging above 500,000 in midsummer, and they are now slightly lower compared with the level at the end of 2009. Yet claims continue to hover in the 450,000 range, a level historically associated with a sluggish economy.
A more accurate gauge of employment trends is the four-week average of initial claims, which is less volatile than the weekly number. The four-week average decreased 3,000 to 455,750.
Most economists believe weekly claims have to start trending down toward 400,000 as evidence that hiring is picking up. So far there is little evidence in claims or other data to indicate a sustained increase in job creation.
“The latest reading is essentially in line with the 450,000 to 465,000 range that has prevailed since late March, so we would need to see further declines before confirming that a meaningful downtrend is in place,” economist Omair Sharif of Royal Bank of Scotland wrote in an e-mail.
The government will provide another important snapshot of the labor market Friday when it issues the monthly employment report for September.
The economy probably added 85,000 private-sector jobs, according to the MarketWatch survey. Yet net employment could fall because the government reduced the number of temporary workers involved in the U.S. census, which is conducted every 10 years.
The U.S. needs to add about 150,000 jobs a month to keep up with natural growth in the labor force and to start to push down the jobless rate, economists calculate. Yet most companies have been unwilling to expand their payrolls until demand for their goods and services increases and they become more confident that an economic recovery is here to stay.
Recent surveys of businesses and consumers, however, show they are still uncertain about the economic outlook. The U.S. economy downshifted in the second quarter to an annualized growth rate of 1.7% from 3.7% in the first quarter, and there are few signs of acceleration.
The combination of slow growth and a cloudy outlook has kept the U.S. unemployment rate near 10%, harking back to levels last seen in the early 1980s. The government will update that number Friday, but little change is expected. The MarketWatch survey calls for the jobless rate to inch up to 9.7% from 9.6% in August.
One potentially positive sign is an increase in want ads, according to the latest Job Openings and Labor Turnover report from the federal Bureau of Labor Statistics. Job openings rose 2% to 3.2 million in August, the Labor Department also reported Thursday. Job postings by the private sector reached the highest point in 21 months and layoffs fell to the lowest level in four years.
The report showed only a small increase in hiring, however.
Bartash writes for MarketWatch.com/McClatchy.
