The closely watch jobless claim indicator shows that 4,000 more workers filed for jobless claims, climbing to 371,000 for the week ending January 5. Bloomberg economists returned a median figure of 365,000 and estimates ranging from 340,000 to 380,000. The Labor Department revised last week’s jobless claim number down to 365,000 from the original claims number of 372,000.
Other Numbers from the Report
The four-week moving average increased to 365,750 from 359,000. Economists prefer the moving average because it evens out the week-to-week volatility inherent in the numbers. The number of Americans who continue to receive benefits declined by 127,000—the biggest drop since January 201, to 311 million for the week ending December 29. This Figure does not include individuals who receive federal extended benefits.
The indicator that measures the unemployment rate among workers eligible to receive benefits decreased to 2.4 percent for December 29 compared to 2.5 to prior week. This represents the lowest level since July 2008, according to the Labor Department.
Increases in jobless benefits claims increased in 30 states and territories. Twenty-three regions jurisdictions reported a decrease in claims, which have a lag time of one week.
December Jobs Report
Job growth and the weekly jobless claims have a direct link. Applications for unemployment benefits decrease when employers hire more workers. The Labor Department’s Job Situation report for December shows that 155,000 new workers were hired last month. The unemployment rate for December was 7.8 percent–the same rate as the revised figure for November — initially given as 7.7 percent.
Although firings have leveled off, and actually declined, companies have been slow to increase payrolls, which is a critical stimulant needed to support consumer spending. The overall environment of the economy improved last week.
“Hiring has been okay,” said Michael Hanson, a senior economist for at Bank of America in New York. “We see payrolls getting better payrolls data to get faster economic growth,” said Hanson, who estimated 375,000 jobless claims for the week. “Hiring has been okay. The process is sluggishly moving forward. We need to see better payrolls data to get faster economic growth.”
Congress Extends Benefits
Congress and the White House finally reached an agreement, which delays spending cuts and averts personal and business tax increases that would have like plummet the economy back into recession. The next issue that businesses will have to overcome and start hiring has to do with the debate over the debt limit.
The budget agreement between Congress and the White House includes a one-year extension of benefits for Americans classified as the “long-term unemployed.”The new program will cost about $30 billion compared to $45.5 billion last year, based on preliminary estimates.