US jobless claims fall in February
US Federal Reserve chairman Ben Bernanke said yesterday the jobless rate was unlikely to reach more normal levels for several years.
The number of Americans filing new claims for unemployment benefits fell more than expected last week, suggesting some traction in the labour market recovery.
However, separate figures showed the US economy barely grew in the fourth quarter with gross domestic product expanding by just 0.1 per cent. The US Commerce Department said the growth rate was the slowest since the first quarter of 2011 and far from what is needed to fuel a faster drop in the unemployment rate.
However, much of the weakness came from a slowdown in inventory accumulation and a sharp drop in military spending. These factors are expected to reverse in the first quarter.
Consumer spending was more robust by comparison, although it only expanded at a 2.1 per cent annual rate.
Because household spending powers about 70 per cent of national output, this still-lacklustre pace of growth suggests underlying momentum in the economy was quite modest as it entered the first quarter, when significant fiscal tightening began.
Initial claims for state unemployment benefits dropped 22,000 to a seasonally adjusted 344,000, the US Labor Department said today. The prior week's claims figure was revised to show 4,000 more applications received than previously reported.
Claims have seen large swings in recent months because of difficulties smoothing the data for seasonal fluctuations, making it hard to get a clear pulse of the labor market's health.
But economists say not all the improvement in claims can be attributed to seasonal factors, suggesting some pick-up in the labor market recovery. Last week's decline left claims at the lower end of the their range for this year. The four-week moving average for new claims, a better measure of labor market trends, fell 6,750 to 355,000.
Job gains have averaged 177,000 per month over the past six months. At least 250,000 jobs per month over a sustained period are needed to significantly reduce the ranks of unemployed, economists say.
The unemployment rate rose 0.1 percentage point to 7.9 percent in January. Federal Reserve chairman Ben Bernanke said yesterday the jobless rate was unlikely to reach more normal levels for several years.
High unemployment prompted the US central bank last year to launch an open-ended bond buying program that it said it would keep up until it saw a substantial improvement in the outlook for the labour market.
The number of people still receiving benefits under regular state programs after an initial week of aid fell 91,000 to 3.07 million in the week ended February 16th, the lowest level since June 2008. The household survey from which the unemployment rate is derived was also conducted during the week ended February 16th.