Unemployment Applications dip to a 4-year Low

Thursday, 01 March 2012 11:00

Written by Backend Update

By DEREK KRAVITZ

The number of people seeking unemployment benefits fell slightly last week to the lowest point in four years, a further sign that the U.S. job market is improving.

A seasonally adjusted 351,000 people sought unemployment aid, down from 353,000 the previous week, the Labor Department said Thursday. That matches the four-year low reached three weeks ago.

The improving numbers show that steadily fewer people are being laid off and suggest that some companies are stepping up hiring.

The four-week average of applications, which smooths out weekly fluctuations in the data, also fell last week, to 354,000. That's also the lowest in four years.

Applications for unemployment aid have fallen steadily since the early fall and are now down nearly 15 percent since October. When applications drop consistently below 375,000, it usually signals that hiring is strong enough to lower the unemployment rate.

John Ryding, an economist at RDQ Economics, said the drop in unemployment applications can be attributed to a "marked improvement in the pace of job creation."

Economists expect another strong month of hiring for February, similar to the average net gain of about 200,000 jobs in each of the previous three months.

The economy added 243,000 net jobs in January, the most in nine months. The unemployment rate dropped for the fifth straight month, to 8.3 percent, the lowest in nearly three years.

Healthier economic growth is spurring greater job growth. The economy expanded at an annual rate of 3 percent in the final three months of last year.

Most economists expect growth to slow in the current quarter, because companies won't need to rebuild their stockpiles of goods as much as they did last winter. That would mean less production of goods.

But there are signs that the economy is still expanding at a healthy pace.

The Federal Reserve said Wednesday that overall economic activity increased at a "modest to moderate pace." It pointed to busier factories, higher retail sales, more jobs and growth in home sales.

Fed Chairman Ben Bernanke told lawmakers that the economy has performed better than expected in recent months and that if the trend continued, it could alter the Fed's outlook for a slow recovery.

The job market still has a long way to go before it fully recovers from the damage of the Great Recession. Nearly 13 million people remain unemployed, and 8.3 percent unemployment is painfully high.

One reason the unemployment rate has fallen is that many people have given up looking for work. The government only counts people as unemployed if they are actively searching for a job.

The number of people receiving unemployment aid ticked up slightly last week. The total benefit rolls rose to 7.5 million in the week ended Feb. 11, the latest data available. That's up nearly 12,000 from the previous week but down from nearly 7.7 million in late January.

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