Washington – The number of Americans seeking unemployment aid fell last week to seasonally adjusted 324,000, the lowest since January 2008. The drop points to fewer layoffs and possibly more hiring.
Join our WhatsApp groupSubscribe to our Daily Roundup Email
The Labor Department says weekly applications fell 18,000, the second straight sharp drop. The four-week average, a less volatile measure, plummeted 16,000 to 342,250.
Applications are a proxy for layoffs. But fewer job cuts are only one side of the equation: Companies also need to be confident enough to add workers for job growth to pick up and lower the unemployment rate.
Economists forecast that the economy added 160,000 jobs last month. That’s much better than the 88,000 added in March, but below last year’s pace of nearly 185,000 per month. The unemployment rate is expected to remain unchanged at 7.6 percent.
The government will release the April employment report Friday.
Weekly applications at or below 350,000 are generally consistent with moderate hiring. But other reports have signaled a worsening jobs picture.
On Wednesday, payroll provider ADP said companies added just 119,000 jobs in April. And a survey of manufacturers by the Institute for Supply Management found that a measure of employment fell sharply last month.
Many companies have been advertising more jobs but have been slow to fill them. Job openings jumped 11 percent during the 12 months that ended in February, but the number of people hired declined, according to a Labor Department report last month.
Across-the-board government spending cuts and higher taxes may be making businesses more cautious about hiring. And an increase in Social Security taxes could slow consumer spending. The Federal Reserve said Wednesday that those policy changes are “restraining economic growth.”
Still, consumers are more optimistic that the job market is healing and will deliver higher pay later this year, according to a survey of April consumer confidence released this week. And lower gas prices could offset some of the pinch from the tax increase.
The economy grew at an annual rate of 2.5 percent from January through March, the government said last week. That was an improvement from the anemic growth of 0.4 percent in the final three months of last year. Most economists expect growth will slow in the current quarter to 2 percent or lower.
My economic professor used to laugh out loud at the jobs report. He thought that the indicator should be abolished as it never includes those who have given up looking for work, or those that aren’t full-time employed and looking for full-time.