Jobless claims in U.S. fall to lowest level in five years

Continuing Claims

The number of people continuing to collect jobless benefits rose by 87,000 to 3.21 million in the week ended Jan. 5. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.

Those who’ve used up their traditional benefits and are now collecting emergency and extended payments increased by about 68,000 to 2.06 million in the week ended Dec. 29.

The unemployment rate among people eligible for benefits rose to 2.5 percent in the week ended Jan. 5 from 2.4 percent. Twenty-nine states and territories reported an increase in claims, while 24 reported a decrease.

Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.

Employment Gains

Job creation held steady in December, with the 155,000 workers added to payrolls in line with the year’s average monthly growth rate of 153,000 jobs, Labor Department data show. That progress brought unemployment to 7.8 percent at the end of 2013, down from 8.3 percent at the start of the year.

A hurdle for the labor market may come from a higher payroll tax that damps consumers’ spending power. As part of its budget agreement on Jan. 1, Congress agreed to let the tax, used to pay for Social Security benefits, return to its 2010 level of 6.2 percent from 4.2 percent. That reduces the paycheck by about $83 a month for someone who earns $50,000.

Contributing to the ranks of the unemployed, American Express Co. said Jan. 11 it will eliminate 5,400 jobs this year. Morgan Stanley, the sixth-largest U.S. bank by assets, plans to eliminate about 1,600 jobs from its investment bank and support staff in upcoming weeks, about half of which are located in the U.S., Bloomberg News reported on Jan. 9.

Bloomberg News

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