US jobless claims rise, but labor market still firming

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.Dozens of retailers and restaurants recruited to fill a combined 300 openings during a job fair Monday, Nov. 17, at the Port of Portland. (Molly Young/The Oregonian) 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. “The claims data still point to relatively upbeat conditions in the labor market,” said Daniel Silver, an economist at JPMorgan Chase, noting that there are routinely ups and downs in the weekly figures.

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.

Claims data often show larger-than-usual swings in the final weeks of the year despite Labor Department efforts to eliminate the impact of seasonal and holiday trends. 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. The four-week moving average of jobless claims is consistent with monthly job gains of at least 250,000, said Joshua Shapiro, chief U.S. economist at the forecasting firm MFR Still, wage growth has lagged hiring. 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 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 Federal Reserve has repeatedly cited an “underutilization” of labor in the economy to justify maintaining interest rates at their current level near zero. 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.

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