US labor market data suggest economy strengthening
WASHINGTON - The number of Americans filing new claims for unemployment benefits last week fell and planned layoffs hit a 13-1/2 year low in December, adding to a range of data that have suggested the economy is gaining steam.
Initial claims for state unemployment benefits dropped 15,000 to a seasonally adjusted 330,000 in the week ended Jan. 4, the Labor Department said on Thursday. Economists had expected them to fall to just 335,000.
Claims are typically volatile around this time of the year because of the weather and the difficulties adjusting the data for unusual and shifting layoff patterns around the holidays.
Still, they have been largely consistent with other labor market indicators that have painted an upbeat picture of the jobs market and the overall economy.
Separately, consulting firm Challenger, Gray & Christmas said planned layoffs at U.S. firms plunged by 32 percent in December to the lowest level since June 2000.
The reports helped to lift U.S. stocks, although the dollar was little changed against a basket of currencies and prices for U.S. government bonds rose only slightly.
From employment to consumer spending and industrial production, the economy appears poised for sustained strong growth in 2014 after false starts in prior years.
The brightening outlook gave the Federal Reserve confidence last month to announce that it would reduce its monthly pace of bond purchases to $75 billion from $85 billion.
With the run of fairly strong data continuing, economists believe the U.S. central bank will announce a further reduction at its next meeting on Jan. 28-29.
In an interview with Time magazine released on Thursday, incoming Fed Chair Janet Yellen said she was "hopeful" that economic growth would accelerate in 2014 to reach 3 percent or more, with inflation moving up toward the central bank's target.
Economists think U.S. GDP growth may not have even reached 2 percent last year.
SOLID DECEMBER PAYROLLS EYED
The jobless claims data for last week has no bearing on the government's closely watched employment report for December, given that it falls outside of the payroll survey period.
The Labor Department is expected to report on Friday that non-farm payrolls increased by 196,000 last month after gaining 203,000 in November, according to a Reuters poll of economists.
There is, however, a risk of a stronger number. Private-sector hiring hit its fastest pace in 13 months in December, while small businesses created the most jobs in nearly eight years, according to reports on Wednesday.
"The underlying trend is encouraging," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. "Job creation is picking up momentum."
The claims data showed the number of people still receiving benefits under regular state programs after an initial week of aid rose 50,000 to 2.87 million in the week ended Dec. 28.
A total of 4.19 million people were receiving benefits under all programs in the week ended Dec. 21. With benefits for more than a million long-term unemployed Americans having expired on Dec. 28, that figure should decline sharply in the weeks ahead.
Economists believe the expiration of the benefits will lower the unemployment rate as former aid recipients either accept jobs they previously would not have considered or drop out of the labor force.