U.S. Initial Jobless Claims Unexpectedly Decline

U.S. Initial Jobless Claims Unexpectedly Decline

Jan. 17 (Bloomberg) -- The number of Americans filing first-time claims for unemployment benefits unexpectedly fell to a three-month low last week, in a period when figures are typically distorted by holidays.

Initial jobless claims decreased by 21,000 to 301,000 in the week ended Jan. 12, the lowest since September, from 322,000 a week earlier, the Labor Department said today in Washington. The four-week moving average, a less volatile measure, fell to a two-month low of 328,500, from 340,250.

Record exports may be encouraging businesses to hold on to workers even as the U.S. economy weakens, economists said. Still, Labor Department warned they have difficulty adjusting for firing patterns during the holidays and getting an accurate gauge of the labor market's health.

``The job market is still tight enough that it's going to generate decent income gains for consumers,'' Julia Coronado, senior economist at Barclays Capital Inc. in New York, said before the report. ``We have seen some softening in labor market conditions, but we're still seeing job growth.''

Homebuilders broke ground on the fewest new homes since 1991 last month, the Commerce Department said separately. Housing starts fell 14 percent to an annual rate of 1.006 million.

Economists predicted claims to rise to 331,000 from the previously reported 322,000 for the week ended Jan. 5, according to the median of 33 forecasts in a Bloomberg News survey. Estimates ranged from 310,000 to 350,000.

Monthly Payrolls

Today's figures correlate with the week the government conducts its monthly payrolls survey. Employers added 18,000 workers in December, the lowest gain since 2004, and the unemployment rate jumped to 5 percent, the Labor Department said on Jan. 4. It is scheduled to release the January employment report on Feb. 1.

Some economists view the level of continuing claims as a more accurate predictor of the state of hiring. The number of people staying on benefit rolls rose to 2.751 million in the week ended Jan. 5, from 2.685 million, according to today's report.

The unemployment rate among people eligible for benefits, which tends to track the U.S. jobless rate, rose to 2.1 percent, from 2 percent.

Twenty-five states and territories reported an increase in new claims, while 28 had a decline. This data is also reported with a one-week lag.

Annual Averages

Prior to this month, filings for jobless benefits were creeping higher. Weekly claims averaged 340,000 the final two months of 2007 and 322,200 for the entire year. In 2006, claims averaged 313,000.

Weakness in the labor market, along with the faltering housing market and higher gasoline and heating costs, may already be weighing on consumer spending. Sales at U.S. retailers unexpectedly dropped in December, the Commerce Department said Jan. 15, and figures for October and November were revised downward.

``Economic pressures caused deterioration in the sales climate at the end of the year,'' National Retail Federation Chief Economist Rosalind Wells said in an e-mailed statement Jan. 15. The NRF said that day that total holiday sales by U.S. retailers climbed 3 percent, the smallest gain in five years and less than the group had forecast.

Profits Weaken

Williams-Sonoma Inc., the U.S. gourmet-cookware retailer, reduced its fourth-quarter profit forecast as holiday sales declined. The company expects further weakness in January and is anticipating an ``increasingly challenging'' 2008, Chief Executive Officer Howard Lester said in a statement.

Federal Reserve Chairman Ben S. Bernanke is scheduled to testify to the House Budget Committee at 10 a.m. today about the economic outlook. Last week, he and other central bank officials said they favored greater ``insurance'' against an economic downturn.

Economists surveyed by Bloomberg News earlier this month forecast consumer spending last quarter slowed to a 2.6 percent annual rate, from 2.8 percent in the third quarter, and will ease further to a 1.6 percent pace the first three months of this year.

Economic growth will average 1.5 percent in the first half of this year, the same as is forecast for the fourth quarter, according to the median forecast in the Bloomberg News survey.

Citigroup Inc., the largest U.S. bank, said Jan. 15 it was cutting 4,200 positions and that it had the biggest loss in its 196-year history in the fourth quarter as surging defaults on home loans forced it to write down the value of subprime- mortgage investments. The company may further reduce its staff in coming months.

``We continue to make plans'' to eliminate positions as the company considers ways to reduce expenses, Chief Executive Officer Vikram Pandit said on a conference call with analysts and investors.

BLOOMBERG