WRAPUP 3-US jobless claims near 2 1/2 yr low for past month

Thu Jan 6, 2011 4:05pm EST

Related Topics

 * Weekly unemployment benefits claims rise 18,000
 * Four-week moving average lowest in more than two years
 * Continuing claims drop 47,000
 (Adds details, updates markets)
 By Lucia Mutikani
 WASHINGTON, Jan 6 (Reuters) - New U.S. claims for jobless
benefits moved higher last week, but a decline in the four-week
average to a nearly 2-1/2-year low suggested the trend toward a
better labor market remains intact.
 Initial claims for state unemployment benefits increased
18,000 to a seasonally adjusted 409,000, the Labor Department
said on Thursday, above economists' expectations for 400,000.
 The data falls outside the survey period for the
government's closely watched employment report for December,
which on Friday is expected to show nonfarm payrolls jumped
175,000 after November's surprisingly small 39,000 gain.
 The spike in claims did little to change perceptions the
economy is now on a sustainable growth path, as flagged by
sturdy data on consumer spending, trade and manufacturing.
 Signs that the labor market was improving were underscored
by the four-week moving average of new benefit applications --
a better measure of underlying trends -- which fell 3,500 last
week to 410,750, the lowest level since late July 2008.
 "It's telling you very clearly that the employment side of
the economy is picking up, it paints a pretty definite picture
that layoffs are on the way down," said Steve Blitz, a senior
economist at ITG Investment Research in New York.
 Growing optimism over the economy was tempered somewhat by
news of below-forecast December sales at top retailers as
consumers who splurged right after Thanksgiving turned into
bargain-hunters. A post-Christmas blizzard also hurt sales.
 Sales at stores open at least a year for the 28 major
retailers tracked by Thomson Reuters rose 3.1 percent, below
Wall Street's forecast of a 3.4 percent increase.
 Graphic showing:
 Retail stocks track sales;    r.reuters.com/saz94r
 ADP vs. the Labor Department: r.reuters.com/sev94r
 Jobless claims:               r.reuters.com/sev94r
 Investors, disappointed with the retail results, sold U.S.
stocks, but losses were limited in anticipation of a bullish
payrolls number. Prices for U.S. government debt rose, while
concerns about high debt levels in peripheral euro zone nations
lifted the dollar to a five-week high against the euro.
 The labor market has lagged the recovery in the overall
economy but should draw support as the benefits of a $858
billion tax package kick in. Economists expect the package,
announced last month, to add up to a full percentage point to
gross domestic product growth this year.
 But Republicans, who wrested control of the U.S. House of
Representatives from Democrats, are going to try to cut
government spending this year, perhaps to the tune of $50
billion. This would take away some of the stimulus offered by
the tax package. For details see [ID:N06125306]
 The decline in the four-week average of new jobless claims
corroborated trends seen in independent data.
 Reports this week showed the number of planned layoffs at
local firms dropped to a 10-1/2 year low in December, while
private sector hiring was unexpectedly robust. Seasonal
factors, however, could have skewed the data.
 "Given continuing evidence that the pace of growth is
picking up, we should continue to see improvement in the
employment picture in the quarters ahead," said Jim Baird,
chief investment strategist at Plante Moran Financial Advisors
in Kalamazoo, Michigan.
 "Nonetheless, it is still going to take years to fully
restore the jobs market to pre-crisis conditions given the
magnitude of job losses during the recession and the
persistently high unemployment rate."
 The unemployment rate is expected to have edged down to 9.7
percent in December from 9.8 percent in November.
 Economists say getting the four-week average for new
jobless claims below 400,000 would be an important signal the
lofty unemployment rate was set to come down.
 (Editing by Kenneth Barry)

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Comments (2)
phuyayyay wrote:
Under the current regime of Obama the Incompetent, it will take about 5 years to get back to Bush era employment numbers. Hopefully the Republicans in the House can repeal many of the Obama job killing regulations so the little people of the world, you know, the ones the Dems tell us they care for so much, can find work. Yesterday was a great day for all Americans because the House is back in control of the adults of the Republican Party!!

Jan 06, 2011 1:45pm EST  --  Report as abuse
acman2k11 wrote:
This is because people being out of UI benefits are no longer counted and the 99er’s are not longer on the UI rolls. Bad story.

Jan 06, 2011 6:03pm EST  --  Report as abuse
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