'Hopeful' signs in US labour market

 

The number of Americans filing new claims for unemployment benefits tumbled to a five-year low last week, a hopeful sign for the sluggish labour market.

Other data showed a surge in residential construction last month, suggesting the housing market was now positioned to support the economy's recovery this year.

Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000, the lowest level since January 2008, the Labor Department said. It was the largest weekly drop since February 2010.

"This is a good sign for the January nonfarm payrolls," said David Sloan, an economist at 4CAST in New York.

While last week's decline ended four straight weeks of increases, it may not signal a material shift in labour market conditions as claims tend to be very volatile around this time of the year.

This is because of large swings in the model used by the department to iron out seasonal fluctuations.

US stock index futures extended gains on the data, while Treasury debt prices fell. The dollar rose against the yen and pared losses against the euro.

The four-week moving average for new claims, a better measure of labour market trends, fell 6,750 to 359,250, suggesting some improvement in underlying labour market conditions.

The claims data covered the survey week for January's nonfarm payrolls. Job growth has been gradual, with employers adding 155,000 new positions in December. The unemployment rate held steady at 7.8 per cent last month.

A second report from the Commerce Department showed housing starts jumped 12.1 per cent last month to a 954,000-unit annual rate, the highest level since June 2008.

Groundbreaking was boosted by a 20.3 per cent surge in multi-family unit construction, with single-family starts rising 8.1 per cent. Permits for future home construction rose 0.3 per cent to a 903,000-unit rate, the highest since July 2008.

The housing market has regained some footing after a historic collapse that helped push the economy into its worst recession since the Great Depression. Residential construction in 2012 is expected to have contributed to growth for the first time since 2005 and is expected to be the key driver this year.

"Housing is a bright spot in the economy and we should see that continue into the end of the year," said Yelena Shulyatyeva an economist at BNP Paribas in New York.

The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid increased 87,000 to 3.21 million in the week ended January 5th.

The four-week average of the so-called continuing claims was the lowest since July 2008.

Reuters

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.