THE number of Americans filing new claims for unemployment aid fell last week to nearly its lowest level in four-and-a-half years, a possible sign that employers have picked up the pace of hiring.
Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 350,000, the Labor Department said on Thursday. The prior week’s figure was revised to show 1,000 more applications than previously reported.
After spiking in the wake of a mammoth storm that ravaged the East Coast in late October, the weekly levels of new claims have now dropped to their lowest levels since the early days of the 2007-09 recession. The four-week moving average fell 11,250 last week to 356,750, the lowest since March 2008.
The claims data for last week has no direct relation to the Labor Department’s monthly employment report, but suggests the surge in layoffs since the recession has at least run its course.
Companies in recent months have been adding to their payrolls at a lacklustre pace, and analysts expect the monthly employment report due on January 4 will show 143,000 jobs created in December, down from 146,000 in November.
Recent claims data could point to a stronger pace of hiring, but many analysts are cautious about extrapolating from the weekly data.
"There is usually a high margin of error in predicting the monthly payroll number," said Michelle Meyer, senior economist at Bank of America Merrill Lynch at New York. "That’s even more the case this month from the residual effects of the hurricane and year-end seasonal adjustments," she said.
US stock index futures edged higher, putting the S&P 500 on track to snap a three-day skid, as US President Barack Obama returned to Washington to restart negotiations to avert some $600bn in tax hikes and government spending cuts due to begin in early January.
Going over this so-called "fiscal cliff" would likely put the US economy back into recession.
While the report on jobless claims had a positive tone, it also included a caveat, at least for the latest week.
President Barack Obama declared Monday a holiday for federal workers and many state offices followed suit and were unable to provide complete data for last week’s jobless claims. Data for 19 states was estimated, a Labor Department official said.
Fourteen of those states, including Texas and California, submitted their own estimates, which tend to be fairly accurate because the state officials work with a significant amount of data, the Labor Department official said.
Besides the federal holiday, there were no special factors influencing week’s claims data, the department official said.
Continuing claims fell 32,000 to 3.206-million, the department said.
In a separate report, the Chicago Federal Reserve said its index of factory activity in the US Midwest increased in November to 93.7 from a revised 92.2 in October.