Fewer Americans than forecast filed
first-time applications for unemployment benefits last week,
easing concern that post-holiday firings were on the rise.
Claims plunged by 50,000 to 352,000 in the week ended Jan.
14, the lowest level since April 2008, Labor Department figures
showed today in Washington. The median forecast of 41 economists
in a Bloomberg News survey projected 384,000. A Labor Department
spokesman said the decrease reflected volatility seen during
this time of year. The four-week average, which smoothes out
fluctuations, decreased to 379,000 last week from 382,500.
Companies are slowing the pace of firings and beginning to
step up the pace of hiring even as a slump in Europe spurred by
a default crisis may limit U.S. growth. The improvement may be a
sign that companies are looking to expand their workforces as
sales climb.
“You’ve got a gradual improvement in the labor market,”
said Brian Jones, a senior U.S. economist at Societe Generale in
New York, whose forecast of 363,000 was the lowest. Because of
“choppiness with the beginning of the calendar year, you have
to look at the four-week moving average” which he said was
“encouraging.”
Other data today showed housing starts in December dropped
more than forecast and consumer prices were little changed.
Stock-index futures held earlier gains after the reports.
The contract on the Standard & Poor’s 500 Index maturing in
March rose 0.4 percent to 1,307.7 at 8:36 a.m. in New York.
Treasury securities fell, sending the yield on the benchmark 10-
year note up to 1.93 percent from 1.90 percent late yesterday.
Cost of Living
The cost of living was little changed for a second month as
stores cut prices to boost holiday sales, the Labor Department
said. The median forecast called for a 0.1 percent gain,
according to a Bloomberg survey of 78 economists. Excluding
volatile food and fuel costs, the so-called core rose 0.1
percent as projected.
Housing starts dropped 4.1 percent to a 657,000 annual rate
last month, reflecting a slump in multifamily dwellings,
Commerce Department figures showed. Building permits, a proxy
for future construction, were little changed.
Jobless claims were projected to decrease from 399,000
initially reported for the prior week, according to the
Bloomberg survey. Estimates ranged from 363,000 to 405,000. The
Labor Department revised the previous week’s figure up to
402,000.
Hurricane Katrina
Last week’s drop was the biggest since September 2005, when
claims first surged then plunged in the aftermath of Hurricane
Katrina.
“Volatility at this time of year is fairly common,” the
Labor Department spokesman said as the data was released. Claims
tend to jump around during holidays as the government has
difficulties adjusting the data for seasonal swings in
employment. It’s more important to track the moving average in
such times, the spokesman said.
The number of people continuing to receive jobless benefits
dropped by 215,000 in the week ended Jan. 7 to 3.43 million.
The continuing claims figure does not include the number of
Americans 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
105,200 to 3.56 million in the week ended Dec. 31.
Eligible for Benefits
The unemployment rate among people eligible for benefits,
which tends to track the jobless rate, fell to 2.7 percent, the
lowest since September 2008, today’s report showed.
Thirty-seven states and territories reported an increase in
claims, while 16 reported a decrease. These data are reported
with a one-week lag.
Initial jobless claims reflect weekly firings and tend to
fall as job growth -- measured by the monthly non-farm payrolls
report -- accelerates.
Payrolls climbed by 200,000 workers in December after
rising by 100,000 the prior month, and the jobless rate fell to
8.5 percent, the lowest level in almost three years, Labor
Department figures showed on Jan. 6.
Banks are among companies still trimming staff. PNC
Financial Services Group Inc., the sixth-largest U.S. bank by
deposits, will cut 621 jobs in North Carolina and reassign some
of the affected employees after buying Royal Bank of Canada’s
U.S. assets.
Corporate Bankers
The lender will redeploy a “significant number” of the
people, Fred Solomon, spokesman for the Pittsburgh-based bank,
said in a phone interview this week. After the deal is
completed, PNC expects to add jobs including corporate bankers
and asset managers, he said.
Kraft Foods Inc., the food company planning to split in two
this year, said it would eliminate 1,600 jobs in North America
this year, about 40 percent of them as a result of reorganizing
U.S. sales, the Northfield, Illinois-based company said this
week in a statement.
Some manufacturers are hiring. The Elgin, Illinois, based-
U.S. unit of Germany’s Harting Deutschland GmbH, a maker of
industrial connectors, will probably hire 20 people this year
after doubling the workforce to 120 since the recession, Chief
Executive Officer Rolf Meyer said.
More Orders
“We have a couple of large orders that we’re negotiating
on in the broadcast and medical industries, and these will
likely hit in the next five or six months,” said Meyer, who,
supplies customers such as General Electric Co. and Siemens AG.
The economy “expanded at a modest to moderate pace” from
late November through the end of December, while most industries
saw “limited permanent hiring,” the Federal Reserve said in
its Beige Book anecdotal business survey released last week.
“The combination of limited permanent hiring in most sectors
and numerous active job seekers has continued to keep a lid on
general wage increases.”
Fed policy makers hold their first policy meeting of the year on Jan. 24-25.
To contact the reporters on this story: Bob Willis in Washington at bwillis@bloomberg.net;
Shobhana Chandra at schandra1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
