Initial claims for state unemployment benefits dropped 15,000 to a
seasonally adjusted 330,000 in the week ended January 4, the Labor
Department said on Thursday. Economists had expected them to fall to
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.
"The labor market seems to have picked up some steam towards the end
of the year," said Guy Berger, an economist at RBS in Stamford,
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 January 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
[to top of second column]
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 December 28.
A total of 4.19 million people were receiving benefits under all
programs in the week ended December 21. With benefits for more than
a million long-term unemployed Americans having expired on December
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.
(Reporting by Lucia Mutikani, additional
reporting by Steven C Johnson in New York; editing by Paul Simao)
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