Unemployment-Claims Data Signal Job Gains Are Near
The number of people claiming unemployment benefits for the first time barely rose last week, after falling to its lowest level since July 2008 the previous week. And the four-week average of claims fell for the 18th straight week to 450,250. That figure has reached its lowest point since September 2008, when the financial crisis intensified with the collapse of Lehman Brothers.
The four-week average of first-time claims is nearing the roughly 425,000 that many economists say would be a sign the economy will start creating jobs.
The Labor Department will issue a more comprehensive snapshot of the job market on Friday, when it releases the monthly jobs report for December. Economists forecast that the unemployment rate will rise to 10.1 percent from 10 percent and that employers will have shed 8,000 jobs.
Still, the steady drop in first-time unemployment claims, and other signs of economic improvement, have led some analysts to predict slight job growth for December. If so, it would be the first net increase in jobs in two years.
Separately, retailers reported modest sales gains for the holiday season, prompting some chains to raise their fourth-quarter profit outlooks. December sales rose 2.8 percent compared with a year ago, according to the International Council of Shopping Centers.
For the overall holiday season, which combines November and December sales, the index was up 1.8 percent. That figure compares with a 5.8 percent drop a year ago, the weakest holiday season in at least four decades.
The December reading was the strongest for 2009 and the most robust since April 2008 when stores collectively had a 3.3 percent gain, according to the ICSC.
The Labor Department said initial claims for jobless benefits rose by 1,000 to a seasonally adjusted 434,000 last week. That's lower than the 447,000 that analysts expected, according to Thomson Reuters.
Initial claims are considered a gauge of the pace of layoffs and an indication of companies' willingness to hire new workers. As the economy slowly recovers from the worst recession since the 1930s, more hiring is key to boosting incomes and fueling consumer spending and economic growth.
The "trivial increase" in initial claims "signals that the underlying trend ... is still downwards and may be accelerating," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients.
The number of continuing claims dropped 179,000 to 4.8 million, the department said. But that figure doesn't include an additional 5.4 million people who are receiving unemployment under federal emergency programs, as of the week ending Dec. 19.
A total of 10.5 million people were receiving unemployment benefits that week, a drop of about 90,000 from a record high the previous week. The many people receiving emergency benefits is partly a result of a decision by Congress in November to extend benefits for a fourth time since the recession began. Jobless workers can now receive up to 73 weeks of benefits, paid for by the federal government, on top of the 26 weeks customarily provided by the states.
This is happening because even as layoffs are declining, hiring hasn't picked up. That leaves people out of work for longer and longer periods of time.
Initial claims for jobless aid have dropped by 100,000, or 19 percent, since late October.
The stock market dipped in morning trading. The Dow Jones industrial average declined 18 points, and broader indexes also edged down.
Some employers are continuing to lay off workers: Defense contractor Lockheed Martin Corp. said Wednesday that it is cutting 1,200 workers, or less than 1 percent of its work force, as it combines two electronics systems businesses to save costs. Alcoa Inc. said it will cut 145 jobs at a plant in Indiana.
Among the states, Pennsylvania reported the largest increase in claims, with 9,653, which it attributed to layoffs in the construction, food and transportation industries. Kentucky, Indiana, Kansas and Ohio had the next largest increases. State data lags the initial claims data by one week.
California reported the largest drop in claims, with 23,160, which it attributed to a holiday-shortened work week and fewer layoffs in the construction and service industries. Texas, Georgia, Florida and North Carolina had the next largest decreases.