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Four-week average for jobless claims hits 5-year low

Associated Press
March 22, 2013
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The number of people seeking U.S. unemployment aid barely changed last week, while the average over the past month fell to a fresh five-year low. The decline in layoffs is helping strengthen the job market.

Weekly unemployment benefit applications rose just 2,000, to a seasonally adjusted 336,000, the Labor Department said Thursday.

Over the past four weeks, the average number of applications has dropped by 7,500, to 339,750. That's the lowest four-week average since February 2008, just three months into the recession.

Separately, sales of previously occupied homes rose last month to their highest level in more than three years, the National Association of Realtors said Thursday. And a measure of future U.S. economic growth increased in February for the third straight month, according to the Conference Board, a business research group.

The three reports Thursday supported other recent data that show the economy is improving after stalling at the end of last year.

Economists pay close attention to the four-week average of applications because it can smooth out week-to-week fluctuations. The steady decline in unemployment claims signals that companies are laying off fewer workers. That suggests many aren't as worried about economic conditions in the near future.

The four-week average has fallen nearly 15 percent since November. The trend has coincided with acceleration in the job market.

"Improvement in labor market conditions continues," Julia Coronado, an economist at BNP Paribas, said in a note to clients.

Applications spiked in the recession as companies slashed millions of workers from their payrolls. The number of people seeking benefits averaged only 320,000 a week in 2007, before the recession began. That figure soared to 418,000 in 2008 and 574,000 in 2009.

It's taken more than three years to unwind those increases. Applications fell to 459,000 in 2010, 409,000 in 2011, and finally down to 375,000 last year. In the first 10 weeks of this year they are averaging just below 350,000.

The number of people continuing to collect jobless benefits rose by 5,000, to 3.05 million, in the week ended March 9. 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 decreased by about 136,000, to 1.78 million, in the week ended March 2.

Fewer layoffs have helped boost job gains in recent months. Employers have added an average of 200,000 jobs per month since November. That's nearly double the average from last spring.

And in February, the unemployment rate fell to a four-year low of 7.7 percent.

Jennifer Lee, an economist at BMO Capital Markets, said the drop in the average number of unemployment applications over the past month suggests job gains in March could top 200,000.

Nearly 5.4 million people were receiving unemployment aid as of the week ended March 2, the latest data available. That was about 250,000 fewer than the previous week. The data on total unemployment benefit recipients are not seasonally adjusted and is volatile.

The job market is benefiting from stronger auto sales and a healthy recovery in housing. Homebuilding permits jumped to their highest level in 4.5 years in February, suggesting that recent strong gains in home construction will continue. New-home sales jumped 16 percent in January to the highest level since July 2008. Auto sales, meanwhile, rose in January and February after hitting a five-year high in 2012.

The housing and auto sectors are being helped by the Federal Reserve's efforts to keep interest rates low, policies the Fed stood by Wednesday after a two-day meeting.

The Fed reinforced its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent, as long as the inflation outlook remains mild. And it said it would continue buying $85 billion a month in bonds indefinitely to keep long-term borrowing costs down.

During a news conference after the meeting, Chairman Ben Bernanke acknowledged the job market has accelerated, but said the Fed wants to see sustained improvement before altering its stimulus policies. Unemployment benefit applications are one of the measures Bernanke said the Fed is closely monitoring.

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