The number of newly laid off workers filing claims for unemployment benefits in the United States fell sharply last week to the lowest level in nearly six months.
The Labor Department reported today that applications for jobless claims dropped by 26,000 to 299,000 last week on a seasonally adjusted basis. It marked the first time jobless claims have fallen below 300,000 since the week of July 22nd.
The improvement was much better than the decline of 9,000 that analysts had been expecting and provided further evidence that the slowing US economy has not begun to seriously affect the labour market outside of specific industries such as housing and auto manufacturing.
The four-week moving average for claims, which helps to smooth out week-to-week volatility, edged down to 314,750, the lowest level since early November.
The good news on jobless claims followed a report last week that employers added 167,000 new jobs in December, a better-than-expected showing that helped keep the unemployment rate steady at a 4.5 per cent.
Job gains in service industries such as health care and banking offset losses in such areas as construction, which had been hard hit by the slump in the once-booming housing market, and in autos, where domestic automakers are struggling against stiff foreign competition.
Although economic growth slowed significantly in the second half of the year, analysts said there are no signs that the economy was threatening to topple into a recession.
They believe that the Federal Reserve is close to achieving its hoped-for soft landing in which slowing growth lowers inflation pressures without triggering a severe downturn.
Even with last year's slowdown, the unemployment rate for the whole year averaged 4.6 per cent, down from a 5.1 per cent average in 2005 and the best showing in six years.
This year the unemployment rate is expected to rise slightly, perhaps hitting 5 per cent by midyear. At that point, economists believe the Fed will start cutting interest rates to give the economy a boost.
Agencies