Jobless claims down 37,000

January data seen as volatile

— The number of Americans seeking unemployment aid fell to a five-year low last week, but much of the decline reflects seasonal volatility in the data.

Weekly unemployment benefit applications fell 37,000 to a seasonally adjusted 335,000, the Labor Department said Thursday. That’s the lowest level since January 2008, just after the recession began.

The four-week average, a less volatile measure, fell to 359,250.

“The labor market is certainly getting better,” said Brian Jones, senior U.S. economist at Societe Generale in New York. Even with the seasonal adjustment factor, “this is still a good report. Chances are claims remain at a fairly low level.”

The applications data can be uneven in January. Job cuts typically spike in the second week of the month as retailers, restaurants and other companies lay off temporary workers hired for the holidays.

The department seasonally adjusts the numbers to account for such trends, but the data can still be choppy.

Last week, the layoffs weren’t as large as expected, a department spokesman said. That caused a steep drop in the seasonally adjusted data.

The broader trend will become clearer in the coming weeks. Applications were declining slightly at the end of last year, pushing the four-week average to a four-year low in the last week of December.

Applications are a proxy for layoffs. Applications fluctuated between 360,000 and 390,000 for most of last year. At the same time, employers added an average of 153,000 jobs a month.

That’s been just enough to slowly push down the unemployment rate, which fell 0.7 percentage point last year to 7.8 percent.

Employers added 155,000 jobs last month, nearly matching the average for the year. December’s steady job gain suggests employers didn’t cut back on hiring in the midst of the debate over tax and spending changes in the federal budget. Many economists feared that the prospect of higher taxes and steep cuts in federal spending would cause a slowdown in job gains.

That’s a good sign, since more budget showdowns are expected. Congress must vote to raise the government’s $16.4 trillion borrowing limit by sometime between mid-February and early March. If not, the government risks defaulting on its debt. Republicans will likely demand deep spending cuts as the price of raising the debt limit.

More than 5.8 million people received unemployment aid in the week ended Dec. 29, the latest data available. That’s about 465,000 more than the previous week. The figure includes about 2 million people who receive extended benefits paid for by the federal government. The rest receive aid under state unemployment programs, which usually lasts 26 weeks.

The overall economy grew at an annual rate of 3.1 percent in the July-September quarter. But economists believe activity slowed considerably in the October-December quarter to a rate below 2 percent or less, in part because companies cut back on restocking.

Information for this article was contributed by Alex Kowalski and Ainhoa Goyeneche of Bloomberg News.

Business, Pages 27 on 01/18/2013

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