The number of new people signing up for jobless benefits plunged last week, partly reflecting a tapering off of filings related to Hurricane Charley.
For the week ending Sept. 4, new applications for unemployment insurance dropped by a seasonally adjusted 44,000 from the previous week to 319,000, the lowest level since July 3, the Labor Department reported Thursday.
The decline of 44,000 was the largest decrease since the week ending Dec. 8, 2001.
A department analyst said that part of the decline came from fewer claims being filed due to the hurricane, which ripped through Florida. Hurricane-related claims had contributed to a rise in unemployment benefit filings in the prior two weeks.
The hurricane hit Florida on Aug. 13. New claims had climbed in the weeks after the storm as people were able to get out to employment offices to file applications for benefits.
The latest snapshot of the layoffs climate was better than analysts were expecting. They were forecasting a smaller drop of around 17,000 for last week.
“We’re getting there. When you look at the underlying trend, the jobs picture is improving,” said Richard Yamarone, economist at Argus Research Corp.
Given the recent volatility in jobless claims because of the storm, economists were putting more stock in the more stable, four-week moving average of claims, which smooths out week-to-week fluctuations. That barometer showed claims fell by 3,750 last week to 339,250, the lowest level since Aug. 21.
Although the labor market recovery has been uneven, the direction of claims when compared with a year ago has clearly shown improvement.
For the same week last year, the number of new people signing up for unemployment benefits stood at 413,000, versus the 319,000 in Thursday’s report. The four-week moving average showed claims at 404,000 a year ago, compared with 339,250.
Still, businesses haven’t completely cast off their caution when it comes to hiring, economists say.
“There’s a little standoffishness at businesses with respect to potential terrorism and higher priced energy. But the economy continues to expand and create positions albeit at a softer pace than we experienced in previous recoveries,” Yamarone said.
The nation’s payroll’s expanded by 144,000 in August, the most since May, the government reported last week. While a step in the right direction, economists say they want to see net job gains of at least 200,000 a month on a consistent basis before they feel comfortable declaring the labor market fully healed.
The economy has lost a net 913,000 jobs since Bush took office.
The economy and jobs are prominent debating points between President Bush and his Democratic rival, John Kerry, as they try to win voters two months before Election Day.
Bush says making his tax cuts permanent will strengthen the economy and spur more job creation. Kerry contends the tax cuts haven’t produced significant job growth and have plunged the government’s balance sheets deeper in red ink.
Federal Reserve Chairman Alan Greenspan, appearing before Congress on Wednesday, said that “employment gains moderated notably after the marked step-up in early spring” in large measure because of soaring energy prices, which weighed on companies.
The outlook for oil prices remains uncertain, he said.
Nonetheless, the “soft patch” the economy hit in the late spring induced largely by high energy prices appeared to be fading, Greenspan said. He noted that the economy has “regained some traction.”
That reinforced expectations the Fed on Sept. 21 will boost short-term interest rates for a third time this year. Economists are forecasting rates to rise to 1.75 percent, from the current 1.50 percent.