Fewer Americans filed claims for unemployment insurance payments last week, showing the labor market is starting 2012 on better footing than a year earlier.
Applications for jobless benefits (INJCJC) decreased 15,000 in the week ended Dec. 31 to 372,000, Labor Department figures showed today. The median estimate of 38 economists in a Bloomberg News survey forecast 375,000 claims. The average over the past four weeks declined to the lowest level in more than three years.
The decrease in firings indicates employers may be getting more comfortable with their headcounts and their economic outlooks as the year begins. Economists forecast a Labor Department report tomorrow will show hiring picked up and joblessness held below 9 percent in December.
“Claims are moving in the right direction,” said Aneta Markowska, a senior U.S. economist at Societe Generale in New York. “The labor market is pretty much treading water, but it’s definitely not as far behind as last year.’
Companies added 325,000 workers in December, more than forecast, adding to evidence the labor market was gaining momentum heading into 2012, figures from the Roseland, New Jersey-based ADP Employer Services also showed today.
The December ADP number may have reflected the so-called purge effect. Workers, regardless of when they are dismissed or quit, sometimes remain on company records until December, when businesses update, or purge, their figures with ADP.
The paycheck processor estimates this change when adjusting its data for seasonal variations and, because there were fewer firings at the end of 2011 than in previous years, ADP may find it more difficult to formulate a projection.
“There’s some possibility that today’s number has been pushed up by that idiosyncratic feature of ADP data,” Joel Prakken, senior managing director at Macroeconomic Advisers LLC in St. Louis, said in a press conference after the report. “In an improving labor market it can lead to an upward bias to seasonal job gains.” Macroeconomic Advisers produces the figures in conjunction with ADP.
Stock-index futures trimmed earlier losses after the reports. The contract on the Standard & Poor’s 500 Index maturing in March decreased 0.3 percent to 1,268.9 at 8:49 a.m. in New York.
Claims estimates ranged from 365,000 to 390,000 in the Bloomberg survey. The Labor Department initially reported the prior week’s applications at 381,000.
A Labor Department official today said there were no special issues affecting last week’s figures.
The less-volatile four-week moving average (INJCJC4) decreased to 373,250, the lowest since June 2008, from 376,500.
The number of people continuing (INJCSP) to collect jobless benefits fell by 22,000 in the week ended Dec. 24 to 3.6 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 5,400 to 3.5 million in the week ended Dec. 17.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, dropped to 2.8 percent in the week ended Dec. 24, today’s report showed. Forty states and territories reported an increase in claims, while 13 had a decrease.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
“Conditions in the labor market seemed to have improved somewhat,” central bank policy makers noted in the minutes of the Federal Open Market Committee’s Dec. 13 gathering released this week. “Initial claims for unemployment insurance moved down, on net, since early November but were still at a level consistent with only modest employment gains, and indicators of job openings and businesses’ hiring plans were little changed.”
Employers probably increased payrolls by 150,000 workers in December after adding 120,000 the prior month, according to the median forecast of economists surveyed by Bloomberg. The unemployment rate rose to 8.7 percent from 8.6 percent, the lowest level since March 2009, the economists project.
Job cuts announced by U.S. employers rose in December from a year earlier, according to another report today. Planned firings (CHALTOTL) climbed 31 percent to 41,785 last month from 32,004 in December 2010, which was the lowest monthly total in 10 years, according to Chicago-based Challenger, Gray & Christmas Inc.
Government budget cuts and diminished business prospects are still leading companies to trim head counts. Boeing Co. (BA) announced yesterday it would close a facility in Wichita, Kansas, that employs more than 2,160 workers. Job cuts will begin in the third quarter of 2012, the Chicago-based planemaker said in a statement.
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