Claims for US unemployment benefits increased more than forecast last week, nearly erasing a slide in the prior two weeks and reflecting the difficulty of adjusting the figures for swings at the start of a year.
Initial jobless claims rose 38,000 in the week ended January 26, the most since November 10, to 368,000, the Labor Department reported today in Washington. Economists forecast 350,000 filings, according to the Bloomberg survey median. The increase followed a combined 45,000 drop in the prior two weeks.
“It looks like the underlying trend in claims is just stable at around 360,000, which is where we were for much of 2012,” said Ryan Wang, an economist at HSBC Securities USA Inc in New York, who projected 367,000 filings. “Today’s increase in claims I think is evidence that the low readings from early January were distorted.”
Employers created about the same number of jobs in January as a month earlier, indicating labour market progress is unfolding about at the same pace as it has the last two years, figures tomorrow may show. Faster consumer spending and corporate investment in new equipment at the end of 2012 indicate employers may look past federal budget debates in Washington and add to headcounts.
The swings in jobless claims may reflect challenges the agency has adjusting the data during the holiday period and at the start of quarters. In 2008, claims slumped in the early part of January before rebounding at the end of the month. Claims this month are typical of this volatility, a Labor Department spokesman said as the figures were released. (Click for table & graph)
Economists’ estimates
Estimates for first-time claims ranged from 320,000 to 390,000 in the Bloomberg survey of 51 economists. No states estimated their claims figures last week.
Stock-index futures held earlier losses after the reports. The contract on the Standard & Poor’s 500 Index maturing in March fell less than 0.1 per cent to 1,493.5 at 8:48 am in New York.
Another report today showed consumer spending climbed in December as incomes grew by the most in eight years, a sign the biggest part of the economy was contributing to the expansion as the year drew to a close. Household purchases, which account for about 70 per cent of the economy, rose 0.2 per cent after a 0.4 percent gain the prior month, the Commerce Department said. Incomes rose 2.6 per cent, pushing the saving rate up to a more than three-year high.
Employment costs
Other data from the Labor Department showed employment expenses in the US rose in the fourth quarter at about the same pace as the previous three months. The employment cost index increased 0.5 per cent after a 0.4 per cent gain. Economists projected a 0.5 per cent advance in the final three months of 2012, according to the Bloomberg survey median.
The gauge measures companies’ costs of wages, benefits and employer-paid taxes such as Social Security and Medicare, which together account for about 70 per cent of total employment costs.
Wage gains for all employees increased 0.3 per cent from the previous three months and 1.7 per cent from the same quarter the prior year. Wages for private workers and for state and local government employees climbed 0.3 per cent from the third quarter.
Benefit costs for all workers, which include some bonuses, severance pay, health insurance and paid vacations, rose 0.6 per cent in the fourth quarter from the previous three months.
Continuing claims
The number of people who continue to collect jobless benefits climbed by 22,000 to 3.2 million in the week ended January 19. The continuing claims figure does not include workers receiving extended benefits from the federal government.
Those who’ve exhausted their traditional benefits and now are collecting emergency and extended payments jumped by about 418,000 to 2.11 million in the week ended January 12.
The unemployment rate among people eligible for benefits held at 2.5 per cent in the week ended January 19. Fifty states and territories reported a drop in claims during that week, while three said they rose.
Initial jobless claims reflect weekly firings and tend to fall as job growth accelerates. The Labor Department, scheduled to release payrolls data tomorrow, may report a 165,000 increase in January employment after a 155,000 rise a month earlier, according to the Bloomberg survey median. Payrolls gains averaged 153,000 in 2012 and 2011. The jobless rate held at 7.8 per cent, the survey showed.
Job cuts
Boston Scientific Corp, the second-biggest maker of heart devices, is among companies cutting jobs. The company this week announced it would cut as many as 1,000 jobs for annual savings of $100 million to $115 million.
“I am confident we are taking the critical steps that are needed to return our company to long-term growth,” Mike Mahoney, president and chief executive officer of the Natick, Massachusetts-based company, said in a Jan. 29 statement. Boston Scientific also will look outside the U.S. to emerging markets for growth opportunities as the company restructures, he said.
Financial-services firms this month could cut the most jobs since the start of 2009. The 16,040 announced and expected reductions in the past three weeks are just short of the 16,389 cuts made in the industry during January 2009 after Lehman Brothers Holdings Inc. collapsed, according to data compiled by Bloomberg.
Financial firms
US financial companies eliminating jobs include Morgan Stanley, which plans to cut 1,700 positions from its investment- banking division and support staff, and American Express Co, which announced January 10 that it will trim headcount by 5,400 this year, mostly in travel services.
Meantime, limited wage growth, coupled with the reinstatement of the payroll tax this month, is weighing on consumer confidence and could depress the household spending that makes up about 70 percent of the economy. The Conference Board’s confidence index decreased to the lowest level since November 2011, figures showed earlier this week.
