Jobless claims rise but the labor market remains firm

31 Dec 2014 | Author: | No comments yet »

Applications for U.S. jobless aid rise, but growth looks solid.

Applications are a proxy for layoffs. Washington — The number of Americans filing new claims for jobless benefits rose more than expected last week, but the trend remained consistent with sustained strength in the labor market.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. 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.

That suggests that employers expect strong economic growth to continue, causing them to hold onto their staff and potentially hire additional workers. While last week’s increase was above Wall Street’s expectations for a rise to 290,000, the claims numbers are very volatile around the Christmas holiday period.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose only 250 to 290,750 last week. It has remained below the 300,000 mark for 16 straight weeks. “Companies are not laying off workers for weak demand recession conditions,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York. “This means that unemployment will continue to fall at a fast rate.” U.S. stocks were trading marginally higher, while the dollar was little changed against a basket of currencies. It’s moving us closer to the point when we get acceleration in wage growth.” Economists’ estimates in the Bloomberg survey ranged from claims of 275,000 to 315,000.

A survey of consumers released on Tuesday by the Conference Board showed households in December were more upbeat than they had been in several years about prospects of getting a job. The government is expected to report next week that nonfarm payrolls rose 240,000 in December after surging 321,000 in November, according to a Reuters survey of economists.

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. Other data on Wednesday showed factory activity in the Midwest cooled in December and a slight rebound in contracts to buy previously owned homes in November, but that did little to change perceptions the economy ended 2014 on solid footing. 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., 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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