Rent-to-own News - Jobless claims at 9-month low

The number of people applying for unemployment benefits fell last week to the lowest level in nine months, that latest evidence that the job market is improving.

The Labor Department said Thursday that weekly applications dropped by 23,000 to a seasonally adjusted 381,000. That's the lowest number of applications since late February.

The four-week average, a less volatile measure, fell for the ninth time in 11 weeks to 393,250. That's the lowest average since early April. Applications that drop below 375,000 — consistently — tend to correlate with a steady decline in the unemployment rate.

"There have been numerous indications that the labor market is healing and today's jobless claims report only reinforces that view," Dan Greenhaus, chief global strategist at BTIG, a trading firm.

Another report out Thursday reinforced the view of a strengthening economy. U.S. wholesale companies increased their stockpiles of autos, paper, and other goods in October by the most in five months, a sign they expect consumer demand to rise.
Weekly unemployment claims

The Commerce Department said Thursday that wholesale inventories grew 1.6%, the most since May. Rising stockpiles of nondurable goods, such as paper and petroleum, drove the increase. September's figure was also revised to show that inventories were unchanged, up from last month's estimate of a 0.1% decline.

Sales at the wholesale level increased 0.9%, after a 0.3% increase in September.

When companies build up inventories, it usually signals that they expect more sales. And the extra factory production needed to increase stockpiles boosts economic output.

Overall inventories shrank in the July-September quarter, shaving more than 1 1/2 percentage points off economic growth. Companies likely cut back stockpiles out of concern over future economic growth.

Companies are now rebuilding stockpiles as the economy is showing signs of improvement. In addition to the wholesale gains, manufacturers increased inventories 0.9% in October, the government said on Monday.

Ellen Zentner, an economist at Nomura Securities, said the report "confirms the big rebound in inventory building that we expected to take place this quarter." That could add as much as 1 1/2 percentage points to growth in the October-December period, she said.

Rising inventories are a big reason economists expect growth will improve in the fourth quarter. Most expect the economy to expand by an annual rate of about 3%, up from 2% in the July-September quarter.

Over the past two years, companies have rebuilt inventories after cutting them to the bone in the recession. That restocking is a big reason the manufacturing sector has been one of the strongest industries in the recovery.

Still, wholesale inventories are lean, compared to sales. That suggests companies are keeping inventories roughly in line with sales. If inventories grow much faster than sales for an extended period, it can force companies to cut back orders.

In October, the ratio of inventories to sales was 1.16, up slightly from September's 1.15. That means it would take 1.16 months to exhaust the current level of stockpiles. That's close to the record low of 1.13 hit in March.

There are other signs that the economy and job market are improving modestly. The unemployment rate fell to 8.6% in November, the government said last week, down from 9% the previous month. That's the lowest rate in 2 1/2 years.

Still, about half the decline stemmed from a drop in the size of the work force.

Employers added a net total of 120,000 jobs last month. The economy has generated 100,000 or more jobs five months in a row — the first time that has happened since April 2006.

The report on hiring gains followed other positive signs. Manufacturing firms are boosting output and retailers reported a strong start to the holiday shopping season. Consumer confidence jumped in November to the highest level since July, and Americans' pay rose in October by the most in seven months.

Many economists expect growth to accelerate in the final three months of the year, to about a 3% annual rate. That would be an improvement from 2% growth in the July-September period.

But the U.S. economy is vulnerable to shocks from overseas. European leaders are struggling to contain a two-year old debt crisis and the 17 nations that use the euro may already be in recession, economists say.

That could slow U.S. exports and cut into overseas profits earned by U.S. multinationals. Even worse, the crisis could force European banks to cut back on lending and U.S. banks to follow suit, leading to a credit crunch. Most economists are penciling in slower U.S. growth next year, partly because of Europe's slowdown.

On the jobless claims report, fewer people are receiving unemployment benefits, and the number of people on extended benefits also fell. Some of that decline is because those out of work found jobs. But economists think most have likely used up all their benefits.

The number of people receiving benefits fell by 174,000 to 3.6 million. But that doesn't include several million people receiving aid under extended programs put in place during the recession. All told, 6.6 million people received unemployment aid in the week ending Nov. 19, the latest data available. That's about 400,000 fewer than the previous week.

Congress is debating whether to continue the extended benefit program, which expires at the end of this year. The program provides up to 99 weeks of benefits in states with high unemployment rates. If the program isn't continued, the Labor Department estimates that about 1.8 million people could lose benefits by early February.