US first-time jobless claims ease

US first-time jobless claims ease
By Alan Rappeport in New York
Copyright The Financial Times Limited 2010.
Published: May 13 2010 14:06 | Last updated: May 13 2010 14:06
http://www.ft.com/cms/s/0/ce85eb64-5e8a-11df-9266-00144feab49a.html


The number of Americans making first-time claims for jobless benefits fell for the fourth week running last week, adding to growing evidence that the labour market is recovering.

Initial jobless claims fell by 4,000 to 444,000, according to labour department figures. That was in line with economists’ expectations and brought the less volatile four-week average of new claims down by 9,000 to 450,000.

Meanwhile, those continuing to claim jobless benefits rose unexpectedly, climbing by 12,000 to 4.62m.

“The claims remain sticky on the high side,” said analysts at Action Economics.

Economists contend that jobless benefits need to fall to the low 400,000 level before the US economy can sustain job creation and have been concerned by the slow pace of improvement. Some have warned that extending unemployment insurance is inflating the unemployment rate by allowing people to be more selective in the jobs they take.

Last week, official figures showed that the US added 290,000 jobs in April, while the unemployment rate ticked up to 9.9 per cent. In spite of signs that the labour market is mending, small businesses are continuing to feel pressure and cut jobs, according to the National Federation of Independent Business.

“The underlying story here, we think, is that big companies slowed their layoffs dramatically in the second half of last year and they are now stable or falling less quickly, but credit-starved smaller firms are still laying people off in large numbers,” said Ian Shepherdson, chief US economist at High Frequency Economics.

Thursday’s data showed a reduction in emergency claims for benefits and a drop in claims in hard-hit states such as California and Florida, where there were fewer job cuts in the services and construction industries.