Job market brightens as unemployment claims sink

CHRISTOPHER S. RUGABER

AP Eco­nom­ics Writer

WASHINGTON — The out­look for the job mar­ket is look­ing brighter.

Far fewer peo­ple are seek­ing unem­ploy­ment ben­e­fits than just three months ago — a sign that lay­offs are falling sharply.

The num­ber of peo­ple apply­ing for ben­e­fits fell last week to 366,000, the fewest since May 2008. If the num­ber stayed that low con­sis­tently, it would likely sig­nal that hir­ing is strong enough to lower unemployment.

The unem­ploy­ment rate is now 8.6 per­cent. The last time appli­ca­tions were this low, the rate was 5.4 percent.

The big ques­tion is whether fewer lay­offs will trans­late into robust hir­ing. It hasn’t hap­pened yet, even though job growth has increased in recent months.

The four-week aver­age of weekly unem­ploy­ment appli­ca­tions, which smooths out fluc­tu­a­tions, dropped last week to 387,750. That’s the low­est four-week since July 2008. The four-week aver­age has declined in 10 of the past 12 weeks.

“Labor mar­ket con­di­tions have taken a turn for the bet­ter in recent weeks,” Michael Gapen, an econ­o­mist at Bar­clays Cap­i­tal, said in a note to clients. “Pay­roll growth should improve in the com­ing months.”

Sep­a­rately, the prices com­pa­nies pay for fac­tory and farm goods rose 0.3 per­cent last month. The fig­ure was pushed up by higher food and phar­ma­ceu­ti­cal prices. But energy prices barely rose, keep­ing infla­tion in check.

In the 12 months end­ing in Novem­ber, whole­sale prices have increased 5.7 per­cent, the Labor Depart­ment said Thurs­day. It’s the small­est year-over-year increase since March.

The department’s pro­ducer price index mea­sures price changes before they reach consumers.

A mixed pic­ture of man­u­fac­tur­ing emerged from other reports Thurs­day. Fac­tory out­put fell in Novem­ber for the first time in seven months, accord­ing to the Fed­eral Reserve. Man­u­fac­tur­ers made fewer cars, elec­tron­ics and appliances.

But some econ­o­mists noted that auto sales rose in Novem­ber, sug­gest­ing that pro­duc­tion will rebound.

And the Fed­eral Reserve Banks of Philadel­phia and New York said man­u­fac­tur­ing expanded in their regions. Man­u­fac­tur­ing has been a key source of growth this year.

Still, the U.S. man­u­fac­tur­ing sec­tor could weaken in 2012. Growth is slow­ing in Asia. Europe is likely already in reces­sion. And U.S. com­pa­nies are reduc­ing their invest­ment in machin­ery and other large equipment.

The down­ward trend in appli­ca­tions sug­gests that com­pa­nies are cut­ting fewer work­ers as the econ­omy picks up. It also comes as Con­gress is wran­gling over whether to extend emer­gency unem­ploy­ment ben­e­fits, which are set to expire at the end of this year.

Growth may top 3 per­cent in the final three months of this year, accord­ing to many econ­o­mists. That would be up from 2 per­cent in the July-September quarter.

Other recent reports sug­gest the job mar­ket is improv­ing a bit. In the past three months, net job gains have aver­aged 143,000 a month. That com­pares with an aver­age of 84,000 in the pre­vi­ous three months.

In Novem­ber, employ­ers added 120,000 jobs, and the unem­ploy­ment rate fell to 8.6 per­cent from 9 per­cent. That was the low­est unem­ploy­ment rate in 2½ years. But about half that decline occurred because many of the unem­ployed gave up look­ing for work. When peo­ple stop look­ing for a job, they’re no longer counted as unemployed.

Employ­ers posted fewer jobs in Octo­ber than in the pre­vi­ous month, the gov­ern­ment said Tues­day, though the decline was modest.

Job open­ings have risen by about 35 per­cent since the reces­sion offi­cially ended in June 2009. But they’re still about 25 per­cent below pre-recession levels.

More than 7.4 mil­lion peo­ple are receiv­ing unem­ploy­ment ben­e­fits, accord­ing to Thursday’s report. About 2 mil­lion will lose their ben­e­fits by mid-February if the emer­gency pro­gram expires.

Law­mak­ers dif­fer over how long ben­e­fits should last. The House passed a Repub­li­can bill Tues­day that would renew emer­gency aid but reduce the max­i­mum dura­tion to 59 weeks from the cur­rent 99 weeks.

Democ­rats want to keep the full 99 weeks. The mea­sure is part of broader leg­is­la­tion in the Democratic-led Sen­ate that would also extend a Social Secu­rity tax cut.

Posted by AP News on Dec 15 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.