Jobless claims hit six-week low

(AP Photo/Branden Camp)

(Bloomberg) — The number of Americans filing for unemployment benefits fell last week as the economy’s continued improvement tempered dismissals.   Jobless claims decreased by 6,000 to 289,000 in the week ended Dec. 13, the fewest since early November, a Labor Department report showed today in Washington. The median forecast in a Bloomberg survey of 51 economists projected 295,000. Claims have been below 300,000 for 13 of the past 14 weeks.  

Employers are curtailing dismissals and hiring at the strongest pace since 1999, a sign of a tightening labor market that may put upward pressure on wage growth. Federal Reserve Chair Janet Yellen and her colleagues yesterday raised their assessment of the labor market and said they will be patient on the timing of the first interest-rate rate increase.

  “Labor demand has in fact picked up a bit,” Stephen Stanley, chief economist at Amherst Pierpont Securities in Stamford, Connecticut, said in a research note. “Chair Yellen set continued improvement in labor market conditions as the key requirement to justify liftoff at some point next year, and the data continue to support that scenario.”  

Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in March climbed 1.1 percent to 2,030.4 at 8:47 a.m. in New York, signaling the gauge will advance for a second day as investors assess the outlook for Fed policy.

  Survey results

Estimates in the Bloomberg survey ranged from 280,000 to 305,000. There was nothing unusual in the data and no states were estimated, a Labor Department spokesman said as the figures were released to the press.

Fed policy makers yesterday projected the economy will reach full employment later next year, while inflation remains below their target at 1 percent to 1.6 percent. They also said prices will “rise gradually” toward their 2 percent goal as the plunge in fuel costs proves transitory.

  The four-week average of jobless claims, a less-volatile measure than the weekly figure, declined to 298,750 from 299,500 the week before.   The number of people continuing to receive jobless benefits dropped by 147,000 to 2.37 million in the week ended Dec. 6, unwinding the previous week’s surge. Insured unemployment had jumped to 2.52 million in the period ended Nov. 29, which was the highest since August.  

Insured unemployment

In that same period, the unemployment rate among people eligible for benefits decreased to 1.8 percent from 1.9 percent the prior week, the report showed.  

Initial jobless claims, which reflect weekly firings, tend to decrease before job growth accelerates, and many companies cutting U.S. jobs now are doing it for business-specific purposes rather than out of economic concern.

Some companies are still trimming staff even as the world’s largest economy improves. GlaxoSmithKline Plc, the U.K.’s largest drug maker, will cut 900 research and operations jobs in North Carolina as part of a global restructuring plan to reduce costs by 1 billion pounds ($1.57 billion), the company said in an e-mailed statement on Dec. 3.

 

“The restructuring is intended to improve operational performance and contribute to a multiyear cost savings initiative across our commercial operations,” Stephen Burr, a Glaxo senior vice president, said in a letter notifying North Carolina’s Department of Commerce of the job cuts.

  Cutting costs

Earnings for London-based Glaxo, which has about 99,000 employees worldwide including 17,000 in the U.S., have slumped, putting pressure on the company to cut costs.

The labor market has “improved further,” the Fed said yesterday in a statement following two days of meetings.

  “Underutilization of labor resources continues to diminish,” it said, dropping the word “gradually” used in its previous statement.  

U.S. employers have added 2.65 million workers to payrolls so far this year, which is already the biggest annual gain since 1999. At 5.8 percent, the jobless rate is the lowest since mid- 2008, and is quickly approaching the 5.2 percent to 5.5 percent that policy makers consider to be full employment.

With assistance from Shobhana Chandra and Chris Middleton in Washington.