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U.S. Initial Jobless Claims Fell by 42,000 to 415,000

U.S. Initial Jobless Claims Fell 42,000 to 415,000 Last Week
A sign saying "Jobs" hangs from the front of the U.S. Chamber of Commerce building in Washington, D.C. Photographer: Joshua Roberts/Bloomberg

The number of Americans filing first-time claims for unemployment insurance fell last week, led by southern states that were affected by storms in prior weeks.

Applications for jobless benefits decreased by 42,000 to 415,000 in the week ended Jan. 29, Labor Department figures showed today. Economists forecast claims would fall to 420,000, according to the median estimate in a Bloomberg News survey. The total number of people receiving unemployment insurance and those collecting extended payments decreased.

Companies, which are holding on to more workers as sales improve, may soon find they need to bolster payrolls to keep up with demand. A Labor Department report tomorrow may show employers last month added the most workers since October, according to economists’ forecasts.

“Job growth has certainly improved from where it was a year ago,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, who correctly forecast the level of claims. “Now we’re waiting to see significant acceleration in job growth. But it will take time.”

Estimates in the Bloomberg News survey of 52 economists ranged from 354,000 to 442,000. The Labor Department revised the prior week’s figure to 457,000 from an initially reported 454,000 claims.

Stock Index Futures

Stock-index futures held earlier losses as oil advanced after protests in Egypt turned violent. The March contract on the Standard & Poor’s 500 Index dropped 0.2 percent to 1,297.5 at 8:55 a.m. in New York. Treasuries fell, pushing up the yield on the benchmark 10-year note to 3.51 percent from 3.48 percent late yesterday.

Another Labor Department report showed worker productivity unexpectedly rose at a faster rate in the fourth quarter of 2010 as employers tried to control costs. The measure of employee output per hour climbed at a 2.6 percent annual rate, compared with a 2.4 percent gain in the previous three months. Labor expenses dropped at a 0.6 percent annual pace.

The number of applications rose by 10,335 in Georgia, by 6,048 in North Carolina and by 3,299 in South Carolina two weeks ago, the report showed, which may reflect a rebound from depressed levels attributed to the influence of bad weather in prior weeks. Those states led the drop last week, a Labor Department spokesman said as the data was released to the media.

Four-Week Average

The four-week moving average, a less volatile measure, rose to 430,500 from 429,500 last week.

The number of people continuing to collect jobless benefits dropped by 84,000 in the week ended Jan. 22 to 3.93 million. Figures for continuing claims do 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 decreased by 68,000 to 4.55 million in the week ended Jan. 15.

The unemployment rate among people eligible for benefits fell to 3.1 percent.

Forty-six states and territories reported a decrease in claims, while seven had an increase.

Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.

Planned Firings

Reports yesterday pointed to a stabilizing labor market. Planned firings by U.S. employers dropped in January by 46 percent from the same month last year to 38,519, according to Challenger, Gray & Christmas. The Chicago-based placement firm said it marked the fewest job cuts for any January since record-keeping began in 1993.

Companies added 187,000 workers last month, figures from ADP Employer Services showed. The median estimate in the Bloomberg News survey called for a 140,000 gain last month.

Economists estimate the Feb. 4 report from the Labor Department will show employers probably added 140,000 jobs in January as the jobless rate rose to 9.5 percent from 9.4 percent the prior month.

Bad weather may have played a role in depressing payrolls. A winter storm that spread from the Midwest and the South to Boston during the week that covers Labor Department’s employer survey, which includes the 12th of a month, could reduce January payrolls by 60,000, economists at UBS Securities LLC in Stamford, Connecticut.

Federal Reserve

The economy hasn’t improved enough for Federal Reserve policy makers to withdraw their plans to pull down the unemployment rate by purchasing $600 billion in Treasury securities. Gross domestic product expanded at a 3.2 percent annual rate in the fourth quarter of 2010 as consumer spending climbed by the most in more than four years, a Commerce Department report showed last week.

“The economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions,” the central bankers said in a statement Jan. 26 after their latest meeting. “The unemployment rate is elevated.”

National Grid Plc, owner of the U.K.’s power and gas networks, said Jan. 31 it plans to cut 1,200 U.S. jobs to reduce operating expenses.

“We’re not earning adequate returns,” Chief Executive Officer Steve Holliday said on a conference call. “Operating costs are still higher than we’re recovering through today’s rates, and there is more to do to operate more efficiently.”

To lift employment, President Barack Obama signed an executive order Jan. 31 announcing the creation of an outside panel of economic advisers tasked with fostering “growth, competitiveness, innovation, and job creation.” General Electric Co.’s chief executive officer, Jeffrey Immelt, will lead the council.

The new panel, called the President’s Council on Jobs and Competitiveness, was established within the Treasury Department to help ensure “the availability of nonpartisan advice to the president from participants in and experts on the economy,” according to the executive order.

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