Unemployment claims rise after steady declines

CHRISTOPHER S. RUGABER

AP Eco­nom­ics Writer

WASHINGTON — The num­ber of peo­ple seek­ing unem­ploy­ment ben­e­fits rose last week after three weeks of decline.

Even with the gain, appli­ca­tions remained at a level con­sis­tent with mod­est hir­ing. And the broader trend over the past month sug­gests job growth could pick up fur­ther in the new year.

Weekly appli­ca­tions increased by 15,000 to a sea­son­ally adjusted 381,000, the Labor Depart­ment said Thursday.

The four-week aver­age, a less volatile mea­sure, dropped for the fourth straight week to 375,000. That’s the low­est level since June 2008.

“Despite the rise in the weekly claims data, the longer-term trend … sug­gests that the recov­ery in the labor mar­ket is main­tain­ing its momen­tum,” said Michael Gapen, an econ­o­mist at Bar­clays Cap­i­tal, in a note to clients.

Appli­ca­tions gen­er­ally must fall below 375,000 — con­sis­tently — to sig­nal that hir­ing is strong enough to reduce the unem­ploy­ment rate.

While lay­offs have fallen sharply since the reces­sion offi­cially ended two and a half years ago, many com­pa­nies have been slow to add jobs.

Econ­o­mists cau­tion that the fig­ures can be volatile around the hol­i­days. The data for seven states, includ­ing Cal­i­for­nia and Vir­ginia, were esti­mated because of the Mon­day hol­i­day, a Labor Depart­ment spokesman said. Those esti­mates have in the past proven reli­able, the spokesman said, and haven’t required major revision.

Hir­ing has improved in recent months. Employ­ers have added an aver­age of 143,000 net jobs a month from Sep­tem­ber through Novem­ber. That’s almost dou­ble the aver­age for the pre­vi­ous three months.

Next year should be even bet­ter. A sur­vey of 36 econ­o­mists by the Asso­ci­ated Press this month found that they expect the econ­omy will gen­er­ate an aver­age of about 175,000 jobs per month in 2012.

More small busi­nesses plan to hire than at any time in three years, a trade group said ear­lier this month. And a sep­a­rate private-sector sur­vey found more com­pa­nies are plan­ning to add work­ers in the first quar­ter of next year than at any time since 2008.

In Novem­ber, the unem­ploy­ment rate fell to 8.6 per­cent from 9 per­cent. Still, 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.

The pickup in hir­ing reflects some mod­est improve­ment in the econ­omy. Growth will likely top 3 per­cent at an annual rate in the final three months of this year, econ­o­mists expect. That would be bet­ter than the 1.8 per­cent growth in the July-September quarter.

Europe is almost cer­tain to fall into reces­sion because of its finan­cial trou­bles. And with­out more jobs and higher incomes, con­sumers may have to cut back on spend­ing. Both could drag on growth next year.

Con­gress removed one poten­tial threat last week when it agreed to extend a pay­roll tax cut and to keep emer­gency unem­ploy­ment ben­e­fits for two addi­tional months. Both pro­grams were sched­uled to expire at the end of this month. Econ­o­mists wor­ried that end­ing the tax break and the extended unem­ploy­ment ben­e­fits pro­gram would have left Amer­i­cans with less money to spend.

About 7.2 mil­lion peo­ple are receiv­ing ben­e­fits, as of the week end­ing Dec. 10, the lat­est data avail­able. That’s an increase of about 80,000 from the pre­vi­ous week.

That fig­ure includes about 3.5 mil­lion laid-off work­ers that are receiv­ing ben­e­fits under an extended ben­e­fits pro­gram put in place dur­ing the recession.

Posted by AP News on Dec 29 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.