WASHINGTON – The number of people applying for U.S. unemployment benefits slipped 2,000 last week to a seasonally adjusted 339,000, the fifth straight decline that shows businesses see little need to cut jobs.
The Labor Department said Thursday that the less volatile four-week average fell 5,750 to 344,000. The average has dropped 11 per cent in the past year.
Applications are a proxy for layoffs. They have fallen back near pre-recession levels this month after spiking in early October because of the partial government shutdown and processing backlogs in California. The steady declines are the latest sign that companies are firing fewer workers.
And last week’s report on hiring and unemployment in October showed that businesses are also hiring workers at a steady pace.
Employers added 204,000 jobs last month, many more than expected and a sign that companies shrugged off the 16-day shutdown. Private businesses added 212,000 positions, the most since February.
Many economists had thought the unemployment benefit applications would fall even lower. The four-week average remains about 10,000 higher than it was in August.
“While it is disappointing that layoffs have not fallen further, the good news is that the government shutdown appears not to have generated a lasting negative impact on labour markets,” Guy Berger, an economist at RBS, said in a research note.
Companies have stepped up hiring as growth has picked up. Employers added an average of 202,000 jobs per month from August through October. That’s up sharply from an average of 146,000 in May through July.
The economy expanded at a 2.8 per cent annual rate in the July-September quarter, up from a 2.5 per cent rate in the previous quarter and just a 1.1 per cent rate in the first three months of the year.
Solid job gains should support steady growth in the coming months. Greater hiring, combined with modest increases in pay, could encourage Americans to spend more. Consumer spending drives roughly 70 per cent of economic activity.
Still, the unemployment rate ticked up to 7.3 per cent last month from 7.2 per cent in September. But that was partly because many federal workers were temporarily laid off during the shutdown.
About 3.9 million people received benefits in the week ending Oct. 26, the latest data available. That’s about 53,000 fewer than the previous week.
The total unemployment benefit rolls have fallen 22 per cent in the past year. Many of those former recipients have likely found jobs. But most have probably used up all their benefits without finding work.
Job growth is a major factor for the Federal Reserve, which is weighing when to reduce its economic stimulus. The Fed has been buying $85 billion-a-month in bonds to keep long-term interest rates low and encourage borrowing and spending.