UK: US jobless claims fall again

The Guardian

US jobless claims lowest since 2008 – but economic growth revised down

Latest government figures suggest that the US jobs market is improving, but growth in third quarter slower than first thought
By Dominic Rushe

The number of Americans making new claims for unemployment benefits has fallen to its lowest levels since April 2008, providing more evidence that the US job market is improving.

But the good news comes as the government announced the US economy grew at a more sluggish rate during the third quarter than first thought.

The jobs figures were released as president Barack Obama faces off with Republican opponents over an extension of a payroll tax that Obama says will cost Americans $40 a paycheck and that economists say threatens to cut $120bn of disposable income in 2012.

Initial jobless claims decreased by 4,000 to a seasonally-adjusted 364,000 in the week ending 17 December, the Department of Labor said on Thursday.

The latest jobs figures come amid mixed signs of recovery in the US economy. Gross domestic product (GDP), the broadest measure of all the goods and services produced in an economy, grew at an inflation-adjusted annual rate of 1.8% in the July-to-September period. The figure was revised down from an earlier estimate of 2%.

While the number is lower, it is still the strongest performance of the year.

The downward revision was made after consumer spending was found to be weaker than first thought, rising 1.7% in the third quarter compared to a previous estimate of a 2.3% increase.

But despite the sluggish recovery, corporate profits have remained strong and the jobless numbers are falling. The latest decline in jobless claims is the third in a row, and brings new unemployment claims to their lowest levels since the week ending April 19, 2008.

Earlier this month the unemployment rate in the US fell below 9% for the first time in two years. The Federal Reserve is forecasting unemployment rates between 8.5% and 8.7% in 2012, with modest economic growth.

Ken Goldstein, economist at the Conference Board, said the numbers were encouraging, especially after positive news on the housing market earlier this week.

Housing starts – a measure of new home-building – rose 9.3% in November to their highest level in over a year, the Department of Commerce said on Tuesday.

"The figures from the housing market and the labour market indicate that we are a little bit stronger than we expected," said Goldstein. Goldstein dismissed the threat to payroll tax as "Kabuki theatre."

"It will get resolved," he said. "Unless the Republicans want to gift-wrap Obama a campaign where he can say the Republicans want to cut taxes for the rich and increase them for the middle class."

http://www.guardian.co.uk/business/2011/dec/22/jobless-figures-fall-us-growth