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New U.S. jobless claims hit lowest level in five years

Bloomberg News
January 17, 2013
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The number of Americans filing first-time claims for unemployment insurance payments fell more than forecast last week to the lowest level in five years, pointing to further improvement in the labor market.

Applications for jobless benefits decreased by 37,000, to 335,000, in the week ended Jan. 12, the lowest level since the period ended Jan. 19, 2008, Labor Department figures showed Thursday. Economists predicted 369,000 claims, according to the median estimate in a Bloomberg survey.

A spokesman for the agency said the drop also may reflect the difficulty the government has in adjusting the data after the holidays when seasonal workers are let go.

“Our weekly numbers bounce around quite a bit,” the Labor Department official said as the figures were released. In the first couple weeks of January, unadjusted claims typically rise to the highest level of the year. The increase this week was smaller than the agency anticipated in adjusting the data.

“This tends to be a short-term distortion,” he said, noting that similar patterns occurred in January 2007 and 2008.

The four-week moving average of claims, a less-volatile measure, dropped to 359,250 from 366,000.

Fewer claims indicate businesses have grown comfortable with their current headcounts, a necessary development before hiring starts to pick up. At the same time, higher payroll taxes that shrink paychecks may prompt companies to hold the line on expanding headcount should Americans cut back on discretionary spending.

“The labor market is certainly getting better,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who projected 345,000 claims. Even with the seasonal adjustment issues, “this is still a good report. Chances are claims remain at a fairly low level.”

Another report Thursday showed housing starts climbed 12.1 percent in December, to a 954,000 annual rate, capping the best year for the industry since 2008. For all of 2012, builders began work on 780,000 homes, up from 608,800 a year earlier, Commerce Department figures showed.

The number of people continuing to collect jobless benefits rose by 87,000, to 3.21 million, in the week ended Jan. 5. 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 68,000, to 2.06 million, in the week ended Dec. 29.

The unemployment rate among people eligible for benefits rose to 2.5 percent in the week ended Jan. 5 from 2.4 percent. Twenty-nine states and territories reported an increase in claims, while 24 reported a decrease.

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

Job creation held steady in December, with the 155,000 workers added to payrolls in line with the year’s average monthly growth rate of 153,000 jobs, Labor Department data show. That progress brought unemployment to 7.8 percent at the end of 2013, down from 8.3 percent at the start of the year.

A hurdle for the labor market may come from a higher payroll tax that damps consumers’ spending power. As part of its budget agreement on Jan. 1, Congress agreed to let the tax, used to pay for Social Security benefits, return to its 2010 level of 6.2 percent from 4.2 percent. That reduces the paycheck by about $83 a month for someone who earns $50,000.

Contributing to the ranks of the unemployed, American Express Co. said Jan. 11 it will eliminate 5,400 jobs this year. Morgan Stanley, the sixth-largest U.S. bank by assets, plans to eliminate about 1,600 jobs from its investment bank and support staff in upcoming weeks, about half of which are located in the U.S.
 

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  1. These liberals are out of control. They want to drive our economy into the ground and double and triple our electric bills. Sierra Club, stay out of Indy!

  2. These activist liberal judges have gotten out of control. Thankfully we have a sensible supreme court that overturns their absurd rulings!

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  4. For you central Indiana folks that don't know what a good pizza is, Aurelio's will take care of that. There are some good pizza places in central Indiana but nothing like this!!!

  5. I am troubled with this whole string of comments as I am not sure anyone pointed out that many of the "high paying" positions have been eliminated identified by asterisks as of fiscal year 2012. That indicates to me that the hospitals are making responsible yet difficult decisions and eliminating heavy paying positions. To make this more problematic, we have created a society of "entitlement" where individuals believe they should receive free services at no cost to them. I have yet to get a house repair done at no cost nor have I taken my car that is out of warranty for repair for free repair expecting the government to pay for it even though it is the second largest investment one makes in their life besides purchasing a home. Yet, we continue to hear verbal and aggressive abuse from the consumer who expects free services and have to reward them as a result of HCAHPS surveys which we have no influence over as it is 3rd party required by CMS. Peel the onion and get to the root of the problem...you will find that society has created the problem and our current political landscape and not the people who were fortunate to lead healthcare in the right direction before becoming distorted. As a side note, I had a friend sit in an ED in Canada for nearly two days prior to being evaluated and then finally...3 months later got a CT of the head. You pay for what you get...

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