The number of Americans filing first-time claims for unemployment insurance payments fell more than forecast last week to the lowest level in five years, pointing to further improvement in the labor market.
Applications for jobless benefits decreased by 37,000 to 335,000 in the week ended Jan. 12, the lowest level since the period ended Jan. 19, 2008, Labor Department figures showed today. Economists forecast 369,000 claims, according to the median estimate in a Bloomberg survey. A spokesman for the agency said the drop may reflect the difficulty the government has in adjusting the data after the holidays when seasonal workers are let go.
Fewer claims indicate businesses have grown comfortable with their current headcounts, a necessary development before hiring starts to pick up. At the same time, higher payroll taxes that shrink paychecks may prompt companies to hold the line on expanding headcount should Americans cut back on discretionary spending.
“The labor market is certainly getting better,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who projected 345,000 claims. Even with the seasonal adjustment issues, “this is still a good report. Chances are claims remain at a fairly low level.”
Another report today showed housing starts climbed 12.1 percent in December to a 954,000 annual rate, capping the best year for the industry since 2008. For all of 2012, builders began work on 780,000 homes, up from 608,800 a year earlier, Commerce Department figures showed.
Stock-index futures added to earlier gains after the reports. The contract on the Standard & Poor’s 500 Index maturing in March climbed 0.6 percent to 1,474.5 at 8:54 a.m. in New York.
Estimates for first-time claims ranged from 340,000 to 385,000 in the Bloomberg survey of 50 economists after an initially reported 371,000 in the prior week.
“Our weekly numbers bounce around quite a bit,” the Labor Department official said as the figures were released. In the first couple weeks of January, unadjusted claims typically rise to the highest level of the year. The increase this week was smaller than the agency anticipated in adjusting the data.
“This tends to be a short-term distortion,” he said, noting that similar patterns occurred in January 2007 and 2008.
The four-week moving average of claims, a less-volatile measure, dropped to 359,250 from 366,000.