By Bob Willis
Jan. 28 (Bloomberg) -- Fewer Americans filed first-time claims for unemployment insurance last week and total benefit rolls shrank, indicating companies are nearing the end of staffing cuts as the economy recovers.
Initial jobless applications declined to 470,000 in the week ended Jan. 23, higher than anticipated, from 478,000 the prior week, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance dropped to the lowest level in a year and those receiving extended benefits also fell.
Companies may want to see accelerating sales before taking on more staff after making the deepest payroll cuts in the post- World War II era. Federal Reserve policy makers yesterday said that while consumer spending is expanding, it is partly being “constrained by a weak labor market.”
“We’re still improving at a very moderate, very slow pace,” said Julia Coronado, a senior economist at BMO Capital Markets in Toronto. “The economy is having difficulty making the transition from the ending of firings to the beginning of hiring.”
A separate report from the Commerce Department showed orders for durable goods excluding transportation equipment increased 0.9 percent in December, more than anticipated. The figure points to gains in investment that Fed policy makers yesterday said were contributing to the recovery.
Stock-index futures rose after the reports. Futures on the Standard & Poor’s 500 Index expiring in March increased 0.3 percent to 1,097.3 at 9:03 a.m. in New York.
Fed on Employment
Fed policy makers, after their meeting on interest rates yesterday, said “the deterioration in the labor market is abating.” Consumer spending is still being “constrained” by an absence of job creation, they said.
Central bankers repeated a pledge to keep the benchmark interest rate low for an “extended period.” Policy makers held the overnight lending rate between banks near zero, where it has been for more than a year to nurture the recovery.
Initial jobless claims were forecast to decline to 450,000 from a previously reported 482,000 the week before, according to the median estimate of 42 economists surveyed by Bloomberg. Estimates ranged from 400,000 to 480,000.
The four-week moving average of claims increased to 456,250 from 446,750 the prior week.
Continuing Claims
Continuing claims fell by 57,000 to 4.6 million in the week ended Jan. 16. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Today’s report showed the number of people who’ve used up their traditional benefits and are now collecting extended payments decreased by about 305,100 to 5.6 million in the week ended Jan. 9.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 3.5 percent in the week ended Jan. 16 from 3.6 percent the prior week, today’s report showed.
The U.S. may have created 27,000 jobs in January, according to the median forecast of economists surveyed before the Labor Department’s Feb. 5 report on employment. It would mark the second time in two years that payrolls have increased.
Unemployment Rate
The unemployment rate probably held at 10 percent this month, close to the 26-year high of 10.1 percent reached in October, the economists forecast.
The loss of 7.2 million jobs since the recession began has been the worst in the post-World War II era.
Verizon Communications Inc. is among companies planning more job cuts. Coping with subscriber losses at its fixed-line phone business, Verizon said it will eliminate about 13,000 jobs at the division.
The cuts will follow similar reductions last year, Chief Financial Officer John Killian said on a conference call this week. This year’s firings equal 11 percent of the staff at the unit, which had about 117,000 workers at year-end.
Other companies are beginning to hire. Ford Motor Co. said Jan. 26 it will spend about $400 million and add 1,200 jobs at two Chicago plants to build a new, more fuel-efficient Explorer sport-utility vehicle.
The Chicago assembly plant will add a second shift, Ford said. The spending also includes development and engineering costs, according to the company’s statement.
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