Fewer Americans filed applications for unemployment benefits last week, a sign the labor market continues to strengthen.
Jobless claims decreased by 2,000 to 326,000 in the week ended Jan. 11, the least since the end of November, from a revised 328,000 in the prior period, a Labor Department report showed today in Washington. The median forecast of 51 economists surveyed by Bloomberg called for 328,000. A Labor Department spokesman said no states were estimated and there was nothing unusual in the data.
Gains in business and consumer spending are boosting growth prospects, allowing employers to hold the line on firings in anticipation of stronger demand. Fewer dismissals typically precede a pick-up in hiring, as companies take on more workers to help production keep pace with improving momentum in the world’s largest economy.
“The level of claims is now consistent with a healthy labor market turnover,” said Yelena Shulyatyeva, U.S. economist at BNP Paribas in New York, which forecast claims would fall to 325,000. “But companies are still reluctant to hire and invest, so that’s the real issue. For the economy to accelerate, we need to see acceleration in hiring.”
Economists’ estimates in the Bloomberg survey ranged from 305,000 to 365,000. The prior week’s claims were revised down from an initial reading of 330,000.
Another report showed the cost of living in the U.S. climbed in December by the most in six months, led by gains in fuel and rents that indicate inflation is making progress in moving toward the Federal Reserve’s goal.
The 0.3 percent gain in the consumer-price index was the biggest since June and followed no change the prior month, according to Labor Department figures. It matched the median forecast of 87 economists surveyed by Bloomberg. The core measure, which excludes food and fuel, rose 0.1 percent, restrained by a record decrease in medical commodities including prescription drugs.
Stock-index futures held earlier losses after the reports. The contract on the Standard & Poor’s 500 Index maturing in March dropped 0.2 percent to 1,838 at 8:58 a.m. in New York.
The four-week average of jobless claims, a less-volatile measure than the weekly figure, declined to 335,000 from 348,500 the week before.
The number of Americans receiving extended benefits under federal programs rose by about 63,500 to 1.35 million in the period ended Dec. 28, the last week of the emergency unemployment compensation.
The U.S. Senate on Jan. 14 failed to advance a Democratic plan to restore those benefits after a dispute over how to cover the cost of the benefits and how long they should continue --for three months or a year -- stalled progress on the measure.
The federal program started in 2008 and at one point provided a total of as many as 99 weeks of benefits, including 26 weeks of standard state-funded benefits. At the end of 2013 the maximum was 73 weeks.
The number of people continuing to receive jobless benefits jumped by 174,000 to 3.03 million in the week ended Jan. 4, the highest since July. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
The unemployment rate among people eligible for benefits increased to 2.3 percent in the week of Jan. 4 from 2.2 percent the prior week.
Twenty-eight states and territories reported an increase in claims, while 25 reported a decline. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and typically wane before job growth can accelerate. Payrolls grew by 74,000 in December, the weakest gain since January 2011, Labor Department figures showed last week. Colder temperatures than normal last month may have contributed to the slowing in hiring, some economists said.
The jobless rate unexpectedly dropped to 6.7 percent, a five-year low, from 7 percent in November as more Americans left the workforce.
Even so, the Federal Reserve will probably stick to its plan for a gradual reduction of bond-buying, tapering purchases by $10 billion over the next six meetings before announcing an end to the program no later than December, according to a Bloomberg News survey of economists following the latest jobs report.”
Fed officials in December cited improvement in the labor market as justification to cut monthly bond purchases to $75 billion starting in January from $85 billion.
Retailers were responsible for some of those gains last quarter, according to a report from consulting firm Challenger, Gray & Christmas Inc. Employment in the industry grew by 801,000 jobs in the final three month of 2013, making it the strongest holiday hiring period since 1999, the report said.
To contact the reporter on this story: Victoria Stilwell in Washington at email@example.com