Unemployment claims indicate layoffs easing
By CHRISTOPHER S. RUGABER
WASHINGTON — A government report yesterday on claims filed for unemployment aid signaled that layoffs are easing and that the economy could be on the verge of posting its first monthly gain in jobs in two years.
The number of people claiming first-time unemployment benefits barely rose last week, the Labor Department said, after falling the previous week to its lowest level since July 2008. And the four-week average of claims fell for the 18th straight week — to its lowest point since September 2008, when the financial crisis intensified with the collapse of Lehman Brothers.
The four-week average of first-time claims is nearing the roughly 425,000 that many economists say would be a sign the economy will start creating jobs.
The Labor Department will issue a more comprehensive snapshot of the job market today, when it releases the monthly jobs report for December. Overall, economists forecast that the unemployment rate will rise to 10.1 percent from 10 percent and that employers will have shed a net 8,000 jobs.
The steady drop in first-time unemployment claims, and other signs of economic improvement, have led some analysts to predict slight job growth. Even a small net gain in jobs, though, wouldn't be enough to lower the unemployment rate anytime soon. Nor would it go far toward restoring the estimated 8 million jobs lost during the recession.
"We are in for a long, hard slog in the labor market," said Zach Pandl, an economist at Nomura Securities.
Still, a gain in jobs could improve consumer confidence and spur greater spending, fueling the economic recovery.
Many analysts estimate that the economy grew by up to an annual rate of 4 percent in the October-December quarter. Federal Reserve officials and private economists worry that much of the recovery stems from temporary factors, such as government stimulus efforts and businesses rebuilding inventories.
More hiring could increase household incomes and spending, which would help sustain the recovery. Signs of more hiring, though, could also draw millions of people who have given up their job searches back into the work hunt. That could boost the unemployment rate in the next few months to as high as 10.5 percent, economists say.
And it will take several years for the economy to create enough jobs to bring the unemployment rate back down to pre-recession levels of about 5 percent.
"We've seen two years of recession, and we're looking at another five years of elevated unemployment on top of that," said Heidi Shierholz, an economist at the Economic Policy Institute, a liberal think tank.
The Labor Department said initial claims for jobless benefits rose by 1,000 to a seasonally adjusted 434,000 last week. That's lower than the 447,000 that analysts expected, according to Thomson Reuters.
Initial claims are considered a gauge of the pace of layoffs and an indication of companies' willingness to hire new workers.
The number of continuing claims dropped 179,000 to 4.8 million, the department said. But that figure doesn't include 5.4 million people who are receiving unemployment benefits under federal emergency programs, as of the week ending Dec. 19.
A total of 10.5 million people were receiving unemployment benefits that week, a drop of about 90,000 from a record high the previous week.
Some employers are continuing to lay off workers: Defense contractor Lockheed Martin Corp. said Wednesday that it is cutting 1,200 workers.
HAWAI'I ALSO SEES HOPE
Hawai'i's initial jobless claims don't precisely track the national trend, but do show some hopeful signs.
Like the national figures, first-time unemployment filings rose in the latest week after reaching their lowest level since the week of Sept. 27, 2008, in the prior week.
Hawai'i's initial unemployment claims were 2,172 in the week ended Jan. 2. A week earlier they had dropped to 2,055, the lowest in 15 months.
Economist here also predict that unemployment will continue to rise during at least the first half of this year. In recent weeks there have been layoffs at Maui Land & Pineapple and from state government.