With a firming labor market, more Americans are employed

The number of Americans filing new claims for unemployment benefits fell last week and job cuts declined sharply in December, suggesting a tightening labor market.

Reports from the US Labor Department, released on Thursday, Jan. 8, support views of faster growth this year, driven by consumer spending, despite a wavering global economy.

“Labor market conditions continue to improve, providing support for consumers and contributing to a virtuous cycle for the economy,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Mich.

Initial claims for state unemployment benefits slipped by 4,000 to a seasonally adjusted 294,000 for the week ending on Jan. 3, according to the Labor Department.

Wall Street economists had forecasted unemployment claims falling to 290,000 last week. The prior week’s data was unrevised, and the trend in claims remained consistent with a steadily tightening labor market. At current levels, claims could have more room to fall further.

“Claims have never dropped below the 280,000-290,000 range in the last 20 years, reflecting the reality that a certain number of layoffs is a natural part of the growth/lifecycle of companies even in the best of times,” said Anthony Karydakis, a chief economic strategist in New York’s Millar Tabak.

The four-week moving average of claims, a better measure of labor market trends as it irons out week-to-week instability, dipped by 250 to 290,500, below the 300,000 mark for the 17th straight week.

Data helped US stocks rally for the second straight day as the US government’s debt prices fell. The dollar even climbed to a nine-year high against the euro.

With fewer layoffs, the strengthening job market backdrop could bring the Federal Reserve a step closer to raising its short-term interest rate, which it has kept near zero since December 2008.

A global outplacement consultancy Challenger, Gray & Christmas also reported the number of job cuts announced by US employers fell 9.2 percent this past December.

For the entire year of 2014, employers announced a total of 483,171 job cuts—about 5 percent fewer than in 2013, and the smallest number since 1997.

“This bodes well for job seekers who will not only find more employment opportunities in 2015, but will enjoy increased job security once they are in those new positions,” said John A. Challenger, chief executive officer the consultancy based in Chicago.

Reports on Wednesday, Jan. 7 showed a jump in small business hiring and another month of solid gains in private payrolls.

The claims report also showed the number of people still receiving benefits, after an initial week of aid increased by 101,000 to 2.45 million in the week ending Dec. 27, 2014. The four-week average of the so-called continuing claims fell by 17,000 to 2.40 million.

The government is also expected to report that nonfarm payrolls have risen by the hundreds of thousands in December, after surging 321,000 in November. That would mark the 11th consecutive month of job gains above 200,000—the longest stretch since 1994.

Overall, employment gains from last year are expected to be the reported largest since the late 90s. The unemployment rate, according to the Labor Department forecast, is slipping one-tenth of a percentage point to 5.7 percent in December, which would be the lowest in seven years.

(With reports from Reuters, CNBC)

(www.asianjournal.com)
(LA Weekend January 10-13, 2015 Sec. A pg.1)