New claims for jobless benefits fell last week to the lowest level in nearly three years, a sign that America’s businesses are feeling more confident that the economic recovery is genuine.
The Labor Department reported Wednesday that new applications filed for unemployment insurance dropped by a seasonally adjusted 15,000 to 339,000 for the week ending Dec. 27. Last week’s drop marked the third week in a row that claims went down and left claims at their lowest level since Jan. 20, 2001.
The latest snapshot of the labor market suggested that businesses may be feeling less inclined to hand out pink slips to workers as the economy shows signs of gaining traction.
“There is clearly reason for optimism that we are getting on a significant job-generation track,” said Ken Mayland, president of ClearView Economics.
The report was better than economists were expecting. They were forecasting a smaller decline that would have pushed claims down to a level of around 350,000.
Claims have been below 400,000 for 13 consecutive weeks, something economists view as a sign that the fragile labor market may be turning a crucial corner.
The more stable four-week moving average of claims, which smooths out week to week fluctuations, decreased last week by 6,500 to 355,750, the lowest level since Feb. 10, 2001.
New claims hit a high this year of 459,000 in the middle of April and have slowly declined, a development cited by Federal Reserve Chairman Alan Greenspan and other economists who say the pace of layoffs is stabilizing.
The labor market has displayed other signs of improvement in recent months. The nation’s unemployment rate currently stands at 5.9 percent — down from a high this summer of 6.4 percent.
But job growth has been slow.
Since Bush took office, the economy has lost 2.3 million jobs, a development that Democrats hope to use against the president as he seeks re-election in 2004. The Bush administration contends that stronger economic growth will eventually lead to more meaningful job creation on a sustained basis.
The uncertain job climate is on Americans’ minds.
Consumer confidence dipped in December amid anxiety about the job market, the Conference Board reported Tuesday. The board’s consumer confidence index slipped to 91.3 in December, following a surge in November to a revised figure of 92.5, its highest level in more than a year.
Economists believe the labor market will be the last part of the economy to recover even as the economy expands solidly.
The economy grew at a breakneck 8.2 percent annual rate in the third quarter, the best performance in nearly two decades. Analysts believe the economy slowed to a rate in the range of around 4 percent or 5 percent in the current quarter, which would still mark a solid showing.
Wednesday’s report also showed that the number of unemployed people collecting jobless benefits for more than a week rose by 81,000 to 3.3 million for the week ending Dec. 20, the most recent period for which that information is available. This suggests that jobs are still hard to find for some workers.
Economists believe that as companies’ profits improve they will feel even more comfortable about ramping up investment and hiring new people, two crucial ingredients to the recovery’s staying power.