Jobless Claims in US Increased More Than Forecast Last Week

31 Dec 2014 | Author: | No comments yet »

Applications for US jobless aid rise, but growth looks solid.

More Americans filed applications for unemployment benefits for the first time in five weeks, displaying the typical year-end holiday swings that make the data difficult to interpret.WASHINGTON (AP) — More Americans sought unemployment benefits last week, but the number of applications continues to be at historically low levels that suggest solid economic growth will continue.Following the report, economists at BNP Paribas said the four-week moving average in claims remains at low levels — 290,750 — which is consistent with an improving labour market. Jobless claims rose by 17,000 to 298,000 in the week ended Dec. 27, from a revised 281,000 in the prior period, a Labor Department report showed today in Washington.

As our regular readers know, claims are usually a Thursday morning event, but due to tomorrow’s New Year’s Day holiday and last week’s Christmas holiday, we’ve closed the year with two rescheduled reports. That suggests that employers expect strong economic growth to continue, causing them to hold onto their staff and potentially hire additional workers. Employers are dismissing fewer workers and adding staff as household purchases pick up, driven by a drop in gasoline costs that will keep boosting the economic expansion. “We tend to have some distortions because of the holidays,” said Thomas Simons, an economist at Jefferies LLC in New York, whose claims estimate for last week was the closest among economists surveyed. “Labor-market conditions are continuing to grind a little bit tighter.

That means that incomes are only barely outpacing inflation, with core consumer prices — which excludes volatile energy and food costs — up 1.7 percent over the past 12 months. The share of the working-age population that has a job or is looking for one remains near 36-year lows, a sign that demand for labor isn’t strong enough to draw in those now sitting on the sidelines. The Federal Reserve has repeatedly cited an “underutilization” of labor in the economy to justify maintaining interest rates at their current level near zero. The addition of 2.7 million workers to payrolls has put the economy on track for the biggest annual gain in hiring since 1999, and the jobless rate is at a six-year low.

The cheapest fuel costs since 2009 also are lifting household spending, which accounts for about 70 percent of the economy, and have helped retailers to draw more holiday shoppers. Steelcase Inc. (SCS), a Grand Rapids, Michigan-based maker of office furniture, is among companies encouraged by the latest figures for economic growth and the labor market. “The jobs creation data, in particular, has had a good correlation with our business,” Chief Executive Officer James Keane said on an earnings conference call with analysts on Dec. 23. “That was a good sign.”

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