By Alex Kowalski - Feb 9, 2012 8:40 PM GMT+0700
The number of Americans filing first- time claims for unemployment insurance payments unexpectedly declined last week, indicating the labor market recovery is gaining traction.
Applications for jobless benefits decreased 15,000 in the week ended Feb. 4 to 358,000, Labor Department figures showed today. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg News survey. The four-week moving average, a less-volatile measure of claims, declined to 366,250, the lowest since April 26, 2008.
The easing of dismissals is moving in tandem with a drop in the unemployment rate, which fell in January to a three-year low of 8.3 percent. Job creation also accelerated last month, showing the world’s largest economy is making headway in restoring the 8.3 million jobs lost during the 2007-2009 recession.
“The recent positive momentum over the past two months is being sustained,” said Millan Mulraine, a senior U.S. strategist at TD Securities in New York, who projected 360,000 claims. “If we stay within this range, then we should see employment growth pick up.”
Estimates for first-time claims ranged from 355,000 to 385,000 in the Bloomberg survey of 48 economists. The Labor Department initially reported the prior week’s applications at 367,000. A Labor Department official today said there was “nothing unusual” among the state-reported data.
Stock-index futures held gains after the figures. The contract on the Standard & Poor’s 500 Index expiring in March rose 0.1 percent to 1,348.5 at 8:34 a.m. in New York. The yield on the benchmark 10-year Treasury note climbed to 2.04 percent from 1.98 percent late yesterday.
Continuing Claims
The number of people continuing to collect jobless benefits rose by 64,000 in the week ended Jan. 28 to 3.52 million. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments increased by about 18,650 to 3.5 million in the week ended Jan. 21.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 2.8 percent in the week ended Jan. 28 from 2.7 percent, today’s report showed. Twenty-seven states and territories reported a decrease in claims, while 26 had an increase.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Payroll Growth
Payroll growth is pointing to a firmer labor market in the U.S. Employers added 603,000 workers in the last three months, while the unemployment rate fell by 0.4 percentage point to 8.3 percent. In January, payrolls jumped 243,000, the biggest gain since April.
“The economy is growing stronger,” President Barack Obama said Feb. 3 in Arlington, Virginia, after the employment data were released. “The recovery is speeding up, and we’ve got to do everything in our power to keep it going.”
Obama challenged Congress to extend a 2 percentage-point payroll tax cut set to expire at the end of the month so that lawmakers “do not slow down the recovery.” Failure to prolong the cut could reduce economic growth by 0.4 percentage point in 2012 and contribute to increased unemployment and job loss, according to calculations by Mark Zandi, chief economist at Moody’s Analytics Inc.
Federal Reserve
The Federal Reserve is also concerned that unemployment is too high. January’s jobless rate understates weakness in the U.S. labor market, Fed Chairman Ben S. Bernanke said earlier this week.
“It is very important to look not just at the unemployment rate, which reflects only people who are actively seeking work,” Bernanke said Feb. 7 in response to questions at a hearing before the Senate Budget Committee. “There are also a lot of people who are either out of the labor force because they don’t think they can find work. We still have a long way to go before the labor market can be said to be operating normally.”
Some companies are still slashing headcounts. Supervalu Inc. (SVU), the owner of Save-A-Lot and Albertsons supermarket chains, said Feb. 7 it will eliminate 800 jobs as part of a plan to trim expenses and lower grocery prices.
To contact the reporter on this story: Alexander Kowalski in Washington at akowalski13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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