Go to the Globe and Mail homepage

Jump to main navigationJump to main content

A man grabs his briefcase as he waits in line to speak with employers at the UJA-Federation Connect to Care job fair in New York, March 21, 201 (SHANNON STAPLETON/Reuters)
A man grabs his briefcase as he waits in line to speak with employers at the UJA-Federation Connect to Care job fair in New York, March 21, 201 (SHANNON STAPLETON/Reuters)

U.S. jobless claims point to slow healing in labour market Add to ...

The number of Americans filing new claims for unemployment benefits last week stayed in a range consistent with job growth and incomes rose in December by the most in eight years, mildly positive signs for a still-fragile economy.

The data suggests points to some underlying momentum in the economy despite a surprise contraction in gross domestic product during the fourth quarter, which largely came from temporary factors.

More Related to this Story

Last week, initial claims for state unemployment benefits increased 38,000 to 368,000, the Labor Department said on Thursday.

The increase follows a week where new claims were at their lowest in five years and still points to an economy where employers are adding jobs, albeit at a lackluster pace.

“It’s still consistent with modest employment growth,” said Sam Bullard, an economist at Wells Fargo Securities in Charlotte, North Carolina.

Economists polled by Reuters had expected claims to increase to 350,000.

Claims have been very volatile this month, dropping sharply in the week ended Jan. 12 and maintaining the trend in the following week. That was largely because the model used by the department to smooth out the seasonal variations has been unusually generous during the first three weeks of January.

The four-week moving average for new claims, a better measure of labor market trends, gained 250 to 352,000, suggesting a steady improvement in labor market conditions.

Last week’s claims data has no bearing on January’s employment report, which is scheduled for release on Friday, as it falls outside the survey period.

Prices for U.S. 30-year Treasuries pared gains, while S&P 500 futures, which were flat to negative before the data, rose a little.

Employers are expected to have added 160,000 jobs to their payrolls in January after an increase of 155,000 in December. The unemployment rate is seen holding steady at 7.8 per cent.

In a separate report, the Commerce Department said American incomes rose 2.6 per cent last month. That was the biggest increase since December 2004 and well above analysts’ expectations for a 0.8 per cent gain.

However, much of the increases in personal incomes over the last two months have been due to special dividends and accelerated bonuses to beat tax increases that were due to begin this month.

The big rise in incomes suggests total consumer spending power entered the new year on a stronger footing, even if the gains may not have been distributed evenly throughout the workforce.

The economy faces the threat of across-the-board spending cuts scheduled for March, as well as the possibility the government might default later this later year and trigger another recession.

After-tax income climbed 2.7 per cent in December, the strongest since May 2008, while consumer spending rose 0.2 per cent, just below the pace expected by analysts in a Reuters poll.

Excluding the one-time factors that boosted incomes in December, after-tax income rose 0.4 per cent.

Planned layoffs at U.S. firms fell in December for the first time in four months, while the overall job-cut total in 2012 was the lowest since 1997, a third report showed on Thursday.

Employers announced 32,556 job cuts last month, the second lowest monthly total of 2012 and down 43 per cent from 57,081 in November, according to the report from consultants Challenger, Gray & Christmas, Inc.

Follow us on Twitter: @GlobeBusiness

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories