- Survivors pulled from Oklahoma tornado debris as toll falls |
- Analysis: Some Republicans see new scandal in Sebelius fundraising
- Convicted U.S. killer Arias would join tiny death row group
- Drop in U.S. underground water levels has accelerated -USGS
- Israel fires back at Syria after gunshots at its troops
Jobless claims point to healing in labor market
WASHINGTON (Reuters) - The number of Americans filing new claims for jobless benefits fell last week and a trend reading hit a near five-year low, signs a grinding recovery in the labor market remains on track.
Other reports on Thursday showed many top U.S. retailers had strong sales in January even as customers were hit with higher taxes, while productivity at businesses slumped in the fourth quarter.
Initial claims for state unemployment benefits dropped by 5,000 to a seasonally adjusted 366,000, the Labor Department said. That was enough to pull down a four-week moving average of new claims, a gauge of the trend in layoffs, by 2,250 to 350,500, its lowest since March 2008.
"The labor market is improving, but certainly not at a robust rate by any means," said Russell Price, an economist at Ameriprise Financial in Troy, Michigan.
While employers have pulled back on layoffs, they have only added jobs at a lackluster pace. Economists say the tepid labor market recovery means the Federal Reserve is likely to keep buying bonds into next year to keep U.S. borrowing costs low.
In a sign of the difficulty many people have in finding a job, the number of people still receiving benefits under regular state programs after an initial week of aid increased 8,000 to 3.22 million in the week ended January 26.
The data came as little surprise to U.S. financial markets, which focused on events in Europe. U.S. stock prices and yields on U.S. government debt fell on worries about the economic outlook in Europe, which were fanned by European Central Bank President Mario Draghi's comments that policymakers are monitoring the economic impact of a stronger euro.
The U.S. economy has shown signs of underlying strength despite a surprise contraction in the fourth quarter.
Consumer spending has looked more robust, and many U.S. retailers on Thursday reported strong sales in January.
Overall, same-store sales rose 5 percent in January across 20 retailers, according to Thomson Reuters I/B/E/S, pointing to some resilience in spending despite a hike in payroll taxes that hit most Americans last month.
The Commerce Department's more comprehensive report on January retail sales, due on February 13, is expected to show sales edged higher from December when adjusted for seasonal swings.
Consumers are borrowing rather readily, a sign of confidence in the recovery. Consumer credit increased by $14.59 billion in December, the Federal Reserve said in a report.
The gains were driven by the biggest increase in non-revolving credit, which includes student and auto loans, since November 2001. That was shortly after the September 11, 2001 attacks when automakers were offering zero-percent financing and other incentives to lure consumers back to their showrooms.
Separately, the Labor Department said U.S. nonfarm productivity fell in the fourth quarter by the most in nearly two years as output increased only marginally despite steady gains in employment.
Productivity declined at a 2 percent annual rate, the sharpest drop since the first quarter of 2011 and a larger fall than the 1.3 percent forecast in a Reuters poll.
Productivity is expected to rebound in the current period because analysts believe weak output during the fourth quarter was partially due to temporary factors like an unusually sharp decline in government spending on the military.
The drop in productivity combined with a big gain in hourly compensation to drive unit labor costs, a gauge of the labor-related cost for any given unit of output, up at a sharp 4.5 percent rate in the fourth quarter.
Hourly compensation, which includes wages as well as employer contributions to social insurance and private benefit plans like health care, rose at a 2.4 percent rate.
The compensation-related jump in unit labor costs could be a harbinger of growing price or profit pressures, but analysts said they did not expect it to be maintained.
"We do not think this report is indicative of a meaningful increase in wage inflation," said Daniel Silver, an economist at JPMorgan in New York.
Moreover, the report also showed gains in compensation are not keeping up with rising prices, a bad signal for the ability of households to boost consumption.
Adjusted for inflation, hourly compensation rose only 0.3 percent in the fourth quarter and was down 0.4 percent over the full year, the second straight annual decline.
(Additional reporting by Herbert Lash and Gertrude Chavez-Dreyfuss in New York; Editing by Neil Stempleman, Tim Ahmann and James Dalgleish)
- Tweet this
- Share this
- Digg this