New claims for unemployment benefits in the United States fell more than expected last week, pointing to more healing in the nation's battered jobs market. Data on jobless claims zigzagged the last few weeks, but the figures suggest employers are less eager to lay off workers, offering hope they could also step up hiring as the economy recovers.
Initial claims for state unemployment benefits dropped 12,000 last week to a seasonally adjusted 367,000, the Labour Department said on Thursday. "The big whacking of workforces is over, and we're just waiting for pickup in activity to lift hiring a bit more strongly," said Pierre Ellis, an economist at Decision Economics in New York. Job growth has gained momentum in recent months and the unemployment rate dropped to a near three-year low of 8.5 percent in December, although dark clouds remain over the economy as Europe struggles with a sovereign debt crisis.
Federal Reserve Chairman Ben Bernanke told lawmakers on Thursday Europe's financial crisis still threatens the US recovery, pledging the Fed will do everything it can to prevent any spillover into the domestic economy. Dow Chemical Co's quarterly profit and revenue missed Wall Street's expectations as it cut capacity in Europe, where the continent's debt crisis has sharply affected exports and where demand for Dow's products is weakest, Chief Executive Andrew Liveris told Reuters.
The country's jobless rate is expected to hold steady at 8.5 percent in a report on January employment and payroll growth due on Friday. While Thursday's claims data gives no direct bearing on the payroll report, analysts said the recent trend in claims is nonetheless positive.
The four-week moving average for initial claims fell 2,000 to 375,750, and claims have been lower than 400,000 for eight of the last 10 weeks. "This is certainly a positive in front of nonfarm payrolls and further supports the view that the US economy is creating more jobs," said Michael Woolfolk, a currency strategist at BNY Mellon in New York. A separate Labour Department report showed growth in US nonfarm productivity slowed in the fourth quarter, which also suggested companies might be closer to squeezing all they can out of their current staff.
"For the moment that's a good thing because it means that any expansion in demand will lead to hiring," said Ellis. The Fed last week acknowledged some improvement in the labour market but said the jobless rate remained too high and that it would likely keep overnight lending rates near zero until at least late-2014.
The report on jobless claims showed the number of Americans on emergency unemployment benefits rose 100,392 to 3.022 million in the week ended January 14, the latest week for which data is available. A total of 7.67 million people were claiming unemployment benefits during that period under all programs, little changed from the prior week.
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