Jobless Claims Show Healthy Drop, Economist Sees Job Creation in December
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In a sign of improvement to the labor market, fewer Americans than expected filed claims for unemployment benefits last week, pointing to growth next year.
Initial jobless claims dropped by 22,000 in the week ending on December 26 to 432,000, the lowest level since July 2008, according to figures from the Labor Department in Washington.
The number of people that are receiving unemployment insurance fell to 4.98 million in the prior week, while those receiving extended jobless benefits jumped.
Consumer spending is picking up as the fragile economic recovery takes hold allowing companies to retain staff as production picks up. Stronger consumer spending, which accounts for 70 percent of the economy, may help to encourage companies to begin hiring practicing again following the worst recession since the 1930s.
Economists had expected that jobless claims would rise to 460,000 from the previous week's revised figure of 454,000. The 4-week moving average for jobless claims fell from 465,750 to 460,250, a decline of 5,500. Claims are down from the 26-year high of 674,000 in the week ending on March 27.
"The improvement has been sufficient, in our view, to justify a forecast of net positive job creation in December," a Deutsche Bank economist said. "We are looking for 50,000-plus on December nonfarm payrolls and a tenth decline in the unemployment rate to 9.9 percent."
The economist noted that the latest week's jobless claims report in encouraging, but are cautious because that week included a major snowstorm and Christmas.
"Clearly, the trend in claims is improving, but it is possible that the latest readings overstate the degree to which this is occurring," the economist said.
The employment report is due to be released by the Labor Department on January 8.
Initial jobless claims dropped by 22,000 in the week ending on December 26 to 432,000, the lowest level since July 2008, according to figures from the Labor Department in Washington.
The number of people that are receiving unemployment insurance fell to 4.98 million in the prior week, while those receiving extended jobless benefits jumped.
Consumer spending is picking up as the fragile economic recovery takes hold allowing companies to retain staff as production picks up. Stronger consumer spending, which accounts for 70 percent of the economy, may help to encourage companies to begin hiring practicing again following the worst recession since the 1930s.
Economists had expected that jobless claims would rise to 460,000 from the previous week's revised figure of 454,000. The 4-week moving average for jobless claims fell from 465,750 to 460,250, a decline of 5,500. Claims are down from the 26-year high of 674,000 in the week ending on March 27.
"The improvement has been sufficient, in our view, to justify a forecast of net positive job creation in December," a Deutsche Bank economist said. "We are looking for 50,000-plus on December nonfarm payrolls and a tenth decline in the unemployment rate to 9.9 percent."
The economist noted that the latest week's jobless claims report in encouraging, but are cautious because that week included a major snowstorm and Christmas.
"Clearly, the trend in claims is improving, but it is possible that the latest readings overstate the degree to which this is occurring," the economist said.
The employment report is due to be released by the Labor Department on January 8.
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