Applications for Jobless Benefits Fall More Than Forecast
Fewer Americans than forecast filed applications for unemployment benefits last week, a sign of persistent strength in the job market.
Jobless claims fell by 11,000 to 271,000 in the week ended Dec. 12, a report from the Labor Department showed Dec. 17. The median forecast in a Bloomberg News survey called for 275,000. Last week coincided with the period that the government surveys businesses and households to calculate payrolls and the jobless rate for December.
Steady demand has encouraged employers to hold the line on dismissals, keeping claims within a historically low range. Steady hiring and an unemployment rate that’s at more than a seven-year low help explain why Federal Reserve policymakers on Dec. 16 raised their benchmark interest rate for the first time in almost a decade.
“Claims are staying at historically very low levels, which shows the labor market is pretty tight,” said David Berson, chief economist at Nationwide Insurance in Columbus, Ohio, who correctly projected the level of applications. “For the bulk of the economy, demand for workers is reasonably high. Companies are hesitant to let workers go.”
While nothing unusual was in the data, claims for Louisiana were estimated because the state was switching to a new system for handling applications, according to the Labor Department.
Estimates of 46 economists in the Bloomberg survey for weekly jobless claims ranged from 230,000 to 284,000.
The four-week moving average, a less volatile measure than the weekly claims numbers, was little changed at 270,500 last week after 270,750. That compares with an average of 271,000 during the comparable employment survey period for November. The economy added 211,000 workers last month, more than projected, and the unemployment rate held at 5%.
The number of people continuing to receive jobless benefits also was little changed, at 2.24 million in the week ended Dec. 5. The unemployment rate among people eligible for benefits held at 1.7%. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings, and a sustained low level of applications has typically coincided with faster job gains. Many layoffs also may reflect company- or industry-specific causes, such as cost-cutting or business restructuring, rather than underlying labor market trends.
Fed policymakers, who concluded a two-day meeting Dec. 16, said “a range of recent labor market indicators, including ongoing job gains and declining unemployment, shows further improvement and confirms that underutilization of labor resources has diminished appreciably since early this year.”
The Federal Open Market Committee unanimously voted to set the new target range for the federal funds rate at 0.25% to 0.5%, up from zero to 0.25%. Policymakers separately forecast an appropriate rate of 1.375% at the end of 2016, the same as September, implying four quarter-point increases in the target range next year, based on the median number from 17 officials.
Another report Dec. 17 showed the current-account deficit widened 11.7% in the third quarter to $124.1 billion, the biggest gap since the last three months of 2008. The shortfall largely was accounted for by a decline in the surplus on primary income and more U.S. government grants to foreigners, according to the Commerce Department.
