US Jobless Claims Drop to Lowest Level Since 2008

[John Manning]

Dec. 31 (Bloomberg) -- Fewer Americans than anticipated filed claims
for unemployment benefits last week, pointing to an improvement in the
labor market that will help sustain economic growth next year.

Initial jobless claims fell by 22,000 to 432,000 in the week ended Dec.
26, the lowest level since July 2008, Labor Department figures showed
today in Washington. The number of people collecting unemployment
insurance fell in the prior week to 4.98 million, and those receiving
extended benefits jumped.

Companies are retaining staff as sales improve and production picks up.
Gains in consumer spending, which accounts for 70 percent of the
economy, may encourage more hiring in coming months, helping to bolster
the rebound from the worst recession since the 1930s.

�It�s boding well for outright job growth,� said Stephen Gallagher,
chief U.S. economist at Societe Generale in New York, who forecast
claims would drop to 430,000. �It seems that some of the layoffs that
took place in the early part of the year were excessive.�

Treasury securities fell after the report, pushing the yield on the
benchmark 10-year note up to 3.84 percent, from 3.79 percent late
yesterday. The Standard & Poor�s 500 Index dropped 1 percent to 1,115.1
at 4:09 p.m. in New York. The S&P 500 gained 23.5 percent this year, the
biggest annual advance since 2003.

Unexpected Drop

�What we�ve seen is definite stability and just a hint toward things
trying to get better,� Jeffrey Joerres, chief executive officer of
Manpower Inc., said in a Bloomberg Television interview today. The
world�s second-largest provider of temporary workers, is experiencing
�slow but steady increases in people who are out on assignment,� he
said. �It�s a little in every office, which is a good sign because it�s
broad-based.�

A Labor Department spokesman said last week�s figures were �consistent�
with recent trends and were not influenced by any unusual factors. Even
so, the week of the Christmas holiday is difficult to adjust for
seasonal variations, he said.

The four-week moving average of initial claims, a less volatile measure,
dropped to 460,250 last week from 465,750 the prior one. Claims are down
from a 26-year high of 674,000 in the week ended March 27.

Continuing claims decreased by 57,000 in the week ended Dec. 19,
reaching the lowest level since February. The continuing claims figure
does not include the number of Americans receiving extended benefits
under federal programs.

Extended Benefits

Today�s report showed the number of people who�ve use up their
traditional benefits and are now collecting extended payments climbed by
about 199,000 to 4.82 million in the week ended Dec. 12. Twenty-nine of
the states and territories where workers are eligible to receive
government extension have begun to report that data, a Labor Department
spokesman said. Two states have started reporting data on the latest
emergency extension, he said.

President Barack Obama this month signed into law legislation that
included a stopgap provision to ensure that unemployment benefits
weren�t cut off over the holidays.

The unemployment rate among people eligible for benefits, which tends to
track the jobless rate, held at 3.8 percent in the week ended Dec. 19,
today�s report showed.

State Breakdown

Twenty-seven states and territories reported a decrease in claims, while
26 reported an increase. These data are reported with a one-week lag.

The government is scheduled to release its December payrolls report on
Jan. 8. In November, the economy lost the fewest jobs since the
recession began two years ago and the unemployment rate receded to 10
percent from a 26-year high of 10.2 percent the prior month.

Even so, Americans are concerned about their financial future. Fewer
consumers in December believed their incomes will increase over the next
three to six months, the Conference Board�s confidence report this week
showed.

Warren Buffett�s Berkshire Hathaway Inc. is among companies that slashed
employment in 2009. The Omaha, Nebraska-based company last week said it
cut 21,000 workers from its payroll amid a slump at the firm�s
manufacturing and retail units. The company and its subsidiaries now
have about 225,000 workers, it said in regulatory filings.

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