Fewer US layoffs no longer suggest strong hiring

In this Sept. 28, 2012, photo, a group of vet­er­ans lis­ten dur­ing a ses­sion with one of the employ­ers at a job fair intro­duc­ing vet­er­ans to careers in the secu­rity and pri­vate inves­ti­ga­tions indus­try at Yan­kee Sta­dium in the Bronx bor­ough of New York. The num­ber of Amer­i­cans seek­ing unem­ploy­ment aid plum­meted the week of Oct. 4, 2012, to sea­son­ally adjusted 339,000, the low­est level in more than four years. The sharp drop offered a hope­ful sign that the job mar­ket could pick up. (AP Photo/Tina Fineberg)

CHRISTOPHER S. RUGABER

AP Eco­nom­ics Writer

WASHINGTON — Declin­ing appli­ca­tions for unem­ploy­ment ben­e­fits have typ­i­cally pointed to stronger hiring.

Not so much anymore.

Since the U.S. reces­sion offi­cially ended in June 2009, fewer lay­offs have meant fewer peo­ple seek­ing unem­ploy­ment aid. On Thurs­day, for exam­ple, the gov­ern­ment said first-time appli­ca­tions for ben­e­fits hit a 4½-year low.

Yet job growth remains slug­gish. That was evi­dent last week in the government’s jobs report for Sep­tem­ber. A sur­vey of employ­ers showed that they added a mod­est 114,000 jobs last month.

And the unem­ploy­ment rate, based on a sep­a­rate sur­vey of house­holds, did sink in August to 7.8 per­cent from 8.1 percent.

If fewer peo­ple are being laid off, why aren’t employ­ers hir­ing more?

Blame the slow pace of the U.S. econ­omy, dam­age from Europe’s eco­nomic cri­sis and fear that tax increases and spend­ing cuts could trig­ger another U.S. reces­sion next year.

Many com­pa­nies have said they lack con­fi­dence that the U.S. econ­omy will strengthen enough in com­ing months to jus­tify hir­ing now.

“The rela­tion­ship between claims and jobs has been less strong dur­ing this recov­ery than in past post-war recov­er­ies,” said Drew Matus, an econ­o­mist at UBS. “There’s a hir­ing prob­lem out there, as opposed to a lay­off problem.”

Even last week’s sharp drop in peo­ple seek­ing unem­ploy­ment ben­e­fits came with a cau­tion­ary note.

Appli­ca­tions fell 30,000 to 339,000, the fewest since Feb­ru­ary 2008. And the four-week aver­age, a less volatile gauge, reached a six-month low. But econ­o­mists noted that much of last week’s drop was due to sea­sonal volatil­ity in the data.

A Labor Depart­ment spokesman said one large state accounted for much of the drop in appli­ca­tions for unem­ploy­ment aid. The spokesman didn’t iden­tify the state, but sev­eral econ­o­mists spec­u­lated that it was California.

The long-term trend in appli­ca­tions for unem­ploy­ment ben­e­fits has been steadily down, though it has lev­eled off since spring.

When the eco­nomic recov­ery offi­cially began in June 2009, an aver­age of roughly 600,000 peo­ple were fil­ing first-time claims for ben­e­fits each week. For nearly a year, that fig­ure has remained con­sis­tently below 400,000.

But the decline hasn’t cor­re­lated with robust job growth, as it did in past eco­nomic recov­er­ies. Many econ­o­mists say they’re not ready to pre­dict a strength­en­ing job market.

“We’re going to wait for some cor­rob­o­rat­ing data,” said Dan Green­haus, chief mar­ket strate­gist at BTIG LLC.

The num­ber of peo­ple who con­tinue to receive unem­ploy­ment ben­e­fits has fallen. Slightly more than 5 mil­lion Amer­i­cans received ben­e­fits in the week that ended Sept. 22, the lat­est period for which fig­ures are avail­able. That’s down about 44,000 from the pre­vi­ous week.

But some peo­ple who no longer receive aid have likely used up all the ben­e­fits avail­able to them.

The 114,000 jobs employ­ers added in Sep­tem­ber are roughly enough to keep pace with pop­u­la­tion growth. They aren’t enough, though, to pro­vide work for the more than 12 mil­lion unem­ployed Americans.

And most of the job increases last month came from those who had to set­tle for part-time work: In Sep­tem­ber, 582,000 more peo­ple than in August said they were work­ing part-time but wanted full-time jobs.

The econ­omy did gain an aver­age of 146,000 jobs a month in the July-September quar­ter — more than twice the monthly pace in the April-June quarter.

Still, another gov­ern­ment report this week added to signs that hir­ing will likely remain mod­est: Employ­ers adver­tised slightly fewer open jobs in August than in July. It was the sec­ond straight monthly drop. And the num­ber of posted open­ings was the fewest since April.

A major prob­lem is the U.S. econ­omy isn’t grow­ing fast enough to gen­er­ate sig­nif­i­cant hir­ing. Eco­nomic growth slowed to a tepid annual rate of 1.3 per­cent in the April-June quar­ter. That was down from a 2 per­cent annual rate in the pre­vi­ous quarter.

And most econ­o­mists fore­see growth stay­ing at or below 2 per­cent in the sec­ond half of the year.

Posted by AP News on Oct 11 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.