Application for unemployment benefits rise along with durable goods orders
January 26th, 2012The number of people seeking unemployment benefits rose last week to a seasonally adjusted 377,000, after a nearly four-year low the previous week. The long-term trend is pointing to a healthier job market.
Applications for unemployment benefits have been trending downward the past few months. Just two week ago, applications had plummeted to their lowest level since April 2008. And the average has fallen about 9% since Oct. 1, according to USA Today.
But the week ending Jan. 21, initial claims increased 21,000, the Labor Department said Thursday. The four-week average, a less volatile measure, fell to 377,500, the government added.
Unemployment applications have been particularly volatile this month because employers have cut temporary workers hired for the holidays. The department adjusts for seasonal trends. But doing so accurately can be difficult.
Applications generally need to fall consistently below 375,000 to signal that hiring is strong enough to lower the unemployment rate.
Hiring improved in the second half of last year. In December, employers added 200,000 jobs, and the unemployment rate fell to 8.5% — the lowest level in nearly three years.
Economists forecast that the nation will gain about 160,000 jobs per month in 2012, according to a survey of economists by the Associated Press. That’s up from an average of about 135,000 last year.
A better outlook for job growth has coincided with other signs of improvement in the economy. Factory output jumped in December and consumer confidence and spending have risen. Even the battered housing market has shown some signs of slight improvement.
Still, the Federal Reserve said Wednesday that it expects growth to remain modest this year. And it forecasts only gradual declines in the unemployment rate.
The Fed predicts the unemployment rate could fall as low as 8.2% by the end of 2012. Growth will be modest: The Fed expects the economy to expand 2.5% at an annual rate this year.
The job market has a long way to go before it fully recovers from the damage of the Great Recession, which wiped out 8.7 million jobs. More than 13 million people remain unemployed. Millions more have given up looking for work and so are no longer counted as unemployed.
Growth could slow this year. Europe is almost certain to fall into recession because of its financial troubles. And wages aren’t keeping up with inflation.
That makes it harder for consumers to spend more, potentially limiting growth.
Manufacturing has been a bright spot in the current recovery. U.S. factory activity has been lifted a surge in exports but economists are worried that the growth in exports could falter if overseas markets, such as Europe, show signs of slowing. Europe accounts for about one-fifth of U.S. exports.
Durable good orders have climbed more than 45% since hitting a recession low in April 2009. That has kept factories busy and helped the economy grow at a slow but steady pace.
Businesses cut back on core capital goods in November for the second straight month, which drew some concerns from economists. The Federal Reserve on Wednesday also cited the decline while warning that the economy remains vulnerable.
But December’s increase in total durable goods orders bolstered the view sketched by other data showing the economy picked up in recent months. Companies are hiring more, factories are making more goods and more people are buying cars.
