Filings by jobless lowest in 15 years

Natalie Parker (left), director of human resources at the Doubletree Grand, talks with job applicants during a job fair last week in Miami.
Natalie Parker (left), director of human resources at the Doubletree Grand, talks with job applicants during a job fair last week in Miami.

WASHINGTON -- The fewest Americans in almost 15 years filed applications for unemployment benefits during a holiday-shortened week that typically makes the data more volatile.

Weekly applications dropped 43,000 to a seasonally adjusted 265,000, the Labor Department said Thursday. That is the lowest level since April 2000. It is also the biggest decline in two years. The four-week average, a less volatile measure, fell 8,250 to 298,500.

"The labor market's in good shape going into 2015 and looks like it will be in good shape for the rest of the year," said Guy Berger, an economist at RBS Securities Inc. in Stamford, Conn. "There's nothing wrong and almost everything right with the economy right now."

The latest drop may have been exaggerated by the federal holiday, which likely slowed the processing of some claims.

Still, applications are a proxy for layoffs, so the sharp decline means companies are probably cutting fewer jobs. The four-week average has fallen 11 percent in the past year. At the same time, hiring has picked up. Employers added almost 3 million jobs last year, the most since 1999. Strong economic growth has encouraged companies to add more workers.

"This is good news," said Jennifer Lee, an economist at BMO Capital Markets. "But it was also a holiday-shortened week so there could be a special factor perhaps artificially deflating the number. A partial reversal next week ... should still show an improving labor market."

Last week included the federal Martin Luther King Jr. holiday, when state unemployment offices were closed. That could have delayed the processing of some applications, a Labor Department spokesman said. The unemployed can apply for benefits online, though they are typically less likely to do so on a holiday. That suggests applications could rise next week.

Some of the drop also reflects the end of seasonal layoffs of temporary employees hired by retailers and restaurants for the Christmas holidays. Those layoffs caused a spike in applications in early January. They reached a seven-month high of 317,000 three weeks ago. The government tries to adjust for such seasonal patterns but isn't always able to do so perfectly.

Applications have been near or below 300,000 since September. That suggests companies are confident enough in the economy to hold onto their staffs.

Last year's robust hiring means that more Americans are earning paychecks than a year ago. That should help consumer spending and speed economic growth this year. Most economists forecast growth will top 3 percent in 2015 for the first time in a decade.

Yet wage growth has lagged hiring. Average wages increased only 1.7 percent in 2014. That's down from 1.9 percent in 2013 and much lower than the 3.5 percent to 4 percent that is consistent with a healthy economy.

Progress in employment, combined with a sustained drop in fuel prices, is bolstering household balance sheets and keeping U.S. growth humming.

The average cost of a gallon of regular grade gasoline was $2.04 on Thursday, down from $3.68 in late June, according to data from motoring group AAA.

A report today from the Commerce Department is projected to show the economy grew at a 3 percent annualized rate in the fourth quarter after expanding at a 5 percent pace in the previous three months that was the strongest in more than a decade. The average growth rate since the expansion began in June 2009 has been 2.3 percent.

Not all companies have been immune to firings. Deere & Co., the largest manufacturer of agricultural machinery, is preparing to let go staff in Iowa and Illinois as the outlook for global orders weakens. The Moline, Ill.-based company plans to dismiss about 910 workers, according to a statement issued last week.

Information for this article was contributed by Christopher S. Rugaber of The Associated Press and by Michelle Jamrisko and Nina Glinski of Bloomberg News.

Business on 01/30/2015

Upcoming Events