Applications for unemployment benefits rises
The number of U.S. workers who filed new applications for unemployment benefits rose 18,000 last week to 409,000, but the level of claims is still sharply lower from just six months ago.
The four-week average of new claims fell 3,500 to 410,750, a 21/2-year low. The moving average is considered a more accurate gauge of employment trends because it evens out fluctuations in the weekly data that can give a distorted picture of the labor market.
Economists polled by MarketWatch had expected initial claims to rise to a seasonally adjusted 400,000. New applications typically spike in the first two weeks of a new year.
Last week’s jobless claims were revised up by 3,000.
The “overall trend remains positive as the four-week moving average continues to drift downward,” said Jim Baird, chief investment strategist at Plante Moran Financial Advisors.
Claims data can be especially volatile during the holiday season, when government offices close for Christmas and New Year’s. Fewer people show up at the unemployment office, and administrative paperwork gets delayed.
In the week of Dec. 18, the number of people who continued to receive benefits under regular state unemployment programs declined by 47,000 to a seasonally adjusted 4.1 million. The four-week average of continuing claims fell 2,750 to 4.12 million.
Since topping 500,000 last August, new applications for jobless benefits have gradually declined. Two weeks ago, the number of workers who filed new claims fell below 400,000 for the first time since the summer of 2008.
During the last recession, new claims peaked at 651,000 in early 2009. Most economists generally believe that claims have to fall below 400,000 on a consistent basis to indicate a faster pace of hiring.
Even in good economic times, however, claims rarely fall below 300,000 as millions of Americans move in and out of the workforce each month.
The gradual decline in claims is one of several pieces of evidence to indicate hiring may be on the mend after a dismal 2010 in which the jobless rate hovered near a 28-year high.
On Wednesday, payroll-processing firm ADP reported a surprisingly large 297,000 gain in private-sector employment in December. Although ADP warned the data might overstate job growth, the firm said evidence suggests an improving labor market.
The federal government will provide another key look at the jobs market Friday when it releases its monthly U.S. employment report. Economists surveyed by MarketWatch forecast net job growth of 170,000 in December, compared with 39,000 in November.
Many economists revised their forecasts higher after the ADP report. ADP and the government’s payroll report track each other very closely over time, though some months can show large gaps between the two.
The U.S. unemployment rate is expected to hold steady at 9.8%, according to the MarketWatch survey. Millions of Americans who lost their jobs during the 2007-2009 recession still remain out of work, and economists say it could take several years for the unemployment rate to fall back to pre-recession levels.
Altogether, 8.77 million people received some kind of state or federal benefits in the week of Dec. 18, on an unadjusted basis. That was down 92,277 from the prior week.
Bartash writes for MarketWatch.com/McClatchy.
