Fewer Americans than forecast filed applications for unemployment benefits last week, easing concern that post-holiday firings were on the rise.
Jobless claims plunged by 50,000 to 352,000 in the week ended Jan. 14, the lowest level since April 2008, Labor Department figures showed today in Washington. The median forecast of 41 economists in a Bloomberg News survey projected 384,000. A Labor Department spokesman said the decrease reflected the usual volatility seen during this time of year.
Companies are slowing the pace of firings and beginning to step up the pace of hiring even as a slump in Europe spurred by a default crisis may limit U.S. growth. The improvement may be a sign that companies are looking to expand their workforces as sales climb.
“Claims are always choppy around the start of a new year but there are simply very few industries left that still need to do any further labor cuts,” Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “Workers are slowly being added as demand has started to pick up a bit.”
The cost of living was little changed in December for a second month as stores cut prices to boost holiday sales, another report from the Labor Department showed. The median forecast called for a 0.1 percent gain, according to a Bloomberg survey of 78 economists. Excluding volatile food and fuel costs, the so-called core rose 0.1 percent as projected.
Jobless claims were projected to decrease from 399,000 initially reported for the prior week, according to the Bloomberg survey. Estimates ranged from 363,000 to 405,000. The Labor Department revised the previous week’s figure up to 402,000.
Last week’s drop was the biggest since September 2005, when claims first surged then plunged in the aftermath of Hurricane Katrina.
“Volatility at this time of year is fairly common,” the Labor Department spokesman said as the data was released. Claims tend to jump around during holidays as the government has difficulties adjusting the data for seasonal swings in employment. It’s more important to track the moving average in such times, the spokesman said.
The four-week moving average, a less volatile measure than the weekly figures, decreased to 379,000 last week from 382,500.
The number of people continuing to receive jobless benefits dropped by 215,000 in the week ended Jan. 7 to 3.43 million.
The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments increased by about 105,200 to 3.56 million in the week ended Dec. 31.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 2.7 percent, the lowest since September 2008, today’s report showed.
Thirty-seven states and territories reported an increase in claims, while 16 reported a decrease. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Payrolls climbed by 200,000 workers in December after rising by 100,000 the prior month, and the jobless rate fell to 8.5 percent, the lowest level in almost three years, Labor Department figures showed on Jan. 6.
Banks are among companies still trimming staff. PNC Financial Services Group Inc., the sixth-largest U.S. bank by deposits, will cut 621 jobs in North Carolina and reassign some of the affected employees after buying Royal Bank of Canada’s U.S. assets.
The lender will redeploy a “significant number” of the people, Fred Solomon, spokesman for the Pittsburgh-based bank, said in a phone interview this week. After the deal is completed, PNC expects to add jobs including corporate bankers and asset managers, he said.
Kraft Foods Inc., the food company planning to split in two this year, said it would eliminate 1,600 jobs in North America this year, about 40 percent of them as a result of reorganizing U.S. sales, the Northfield, Illinois-based company said this week in a statement.
Some manufacturers are hiring. The Elgin, Illinois, based-U.S. unit of Germany’s Harting Deutschland GmbH, a maker of industrial connectors, will probably hire 20 people this year after doubling the workforce to 120 since the recession, Chief Executive Officer Rolf Meyer said.
“We have a couple of large orders that we’re negotiating on in the broadcast and medical industries, and these will likely hit in the next five or six months,” said Meyer, who, supplies customers such as General Electric Co. and Siemens AG.
The economy “expanded at a modest to moderate pace” from late November through the end of December, while most industries saw “limited permanent hiring,” the Federal Reserve said in its Beige Book anecdotal business survey released last week. “The combination of limited permanent hiring in most sectors and numerous active job seekers has continued to keep a lid on general wage increases.”