Jobless claims in US rising at slower pace

Fri, Jan 8, 2010, 00:00

FIRST-TIME claims for jobless benefits rose in the US last week, but continue to hover around levels that suggest the US economy could increase jobs for the first time in two years.

Initial jobless claims rose 1,000 to 434,000, US Labor Department figures showed yesterday. The rise was smaller than economists predicted, and the four-week average of fresh claims declined to the lowest level in 18 months.

Analysts have been keeping a close watch on jobless claims as a gauge of the health of the labour market. The economy tends to add jobs when unemployment claims fall to the 400,000 level and many analysts expect to see job creation in today’s closely watched official non-farm payrolls report.

“Jobless claims do suggest that employment could be set to grow again,” said Abiel Reinhart, an economist at JPMorgan.

Meanwhile, the number of US citizens continuing to claim unemployment benefits narrowed for the third week running as workers saw their benefits begin to expire. Continuing unemployment claims fell by 179,000 to 4.8 million.

In November, the unemployment rate fell to 10 per cent from 10.2 per cent, with only 11,000 jobs shed during the month.

The US last added jobs in December 2007, when the recession officially started. The pace of jobless claims has slowed substantially in recent months after averaging 573,000 per week in 2009 but a decline in the unemployment rate is expected to be gradual.

US shoppers braved pre-Christmas blizzards and economic uncertainties to deliver stronger-than-expected December sales for leading retailers. Retail Metrics said its index of comparable store sales rose 3 per cent in December, which represents the strongest increase since April 2008.

The improvement came after a disappointing rise of 0.8 per cent in November and compared with a 3.5 per cent fall in December 2008.– Copyright The Financial Times Limited 2010