New Jobless Claims Drop to 514K
The number of newly laid-off U.S. workers filing claims for unemployment insurance has fallen to the lowest level since early January, a sign the labor market is slowly improving.
And consumer price pressures in September as Americans slowly regain their appetite to shop amid a fledgling economic recovery.
The Labor Department said Thursday that first-time claims for jobless benefits dropped to a seasonally-adjusted 514,000 from an upwardly revised 524,000 the previous week. The fifth decline in six weeks was below Wall Street economists' forecasts of 525,000, according to Thomson Reuters.
The four-week average, which smooths fluctuations, fell for the sixth straight time to 531,500. That's the lowest since January and about 105,000 below the peak reached in early April.
Meanwhile, the White House reported that it has created or saved through federal contracts funded by its stimulus efforts. The data appeared on the government's stimulus Website, Recovery.gov.
Economists closely watch initial claims, which are considered a measure of layoffs and the willingness of companies to add jobs.
The steady decline in claims indicates that companies are shedding fewer workers. Many economists expect that job losses will fall below 200,000 in October from 263,000 in September. That's still a large amount, but would be the fewest in a year.
In a separate report, the Labor Department said consumer prices rose 0.2 percent last month, matching analysts' expectations. Prices excluding the volatile energy and food categories also rose 0.2 percent, slightly higher than the 0.1 percent increase analysts had forecast.
Over the past 12 months, consumer prices fell 1.3 percent, reflecting a severe recession that has kept a lid on inflation across a wide range of products and services. Excluding food and energy, prices rose 1.5 percent.
The absence of price pressures has been good news for cash-strapped households, but it means next year for the more than 57 million Americans receiving Social Security and other government benefits, the first time that's happened in over 30 years.
However, President Barack Obama on Wednesday urged Congress to provide a one-time payment of $250 to help senior citizens cope with the absence of higher benefit checks next year. Such a payment would cost the government about $13 billion.
Despite the improvement, the weekly tally of jobless claims remains above the 325,000 associated with a healthy economy.
The tally of people continuing to claim benefits dropped by 75,000 to 5.99 million, its first time below 6 million since the week of March 28. Continuing claims data lags initial claims by a week.
Many of those recipients have moved onto extended benefit programs. Congress has added about 53 weeks of emergency benefits on top of the 26 weeks typically provided by states. When extended programs are included, a total of 8.87 million people received benefits in the week ending Sept. 26, the latest week data is available. That's down about 40,000 from the previous week.
The Labor Department reports come as consumers are showing some signs of life. Retail sales due to a sharp drop in auto sales, according to a government report Wednesday. But excluding autos, sales rose 0.5 percent in September. That was better than analysts expected and followed a 1 percent gain in August.
Auto sales had been inflated in August by the government's Cash for Clunkers program, which provided $4,500 rebates to consumers who traded in older vehicles for newer, more fuel-efficient models.
Consumer demand, which accounts for 70 percent of total economic activity, is being watched closely by economists who worry that any recovery from the recession could stall due to rising unemployment, tight credit and other headwinds that households still face.
But the two months of gains in retail sales, excluding autos, "are an encouraging sign that consumers' bunker mentality is gradually giving way to more familiar spending patterns," Michael Feroli, U.S. economist at JPMorgan Chase, wrote in a note to clients.
On Wall Street, the better-than-expected retail sales figures and surprisingly strong earnings reports from Intel Corp. and JPMorgan Chase & Co. pushed the Dow Jones industrials for the first time in a year on Wednesday.
Enthusiasm over the Dow's climb , as earnings reports from Goldman Sachs and Citigroup .
Most economists forecast the economy will grow at about a 3 percent pace in the second half of 2009. But they warn that won't be fast enough to bring down the unemployment rate. Federal Reserve Chairman Ben Bernanke has said that even with 3 percent growth, the jobless rate will remain above 9 percent through next year.
Some companies are still shedding workers. Ebay Inc. said Wednesday that it would lay off several dozen employees as part of an internal restructuring.
Among the states, Pennsylvania had the largest increase in claims, with 3,618, which it attributed to layoffs in the construction, primary metals, furniture and food industries.
Florida reported the largest drop in claims, with 5,178, which it attributed to fewer layoffs in the construction, service and manufacturing industries.