Applications for unemployment benefits fall to lowest level in 3 months; job openings rise

By Christopher S. Rugaber, AP
Thursday, October 7, 2010

Unemployment claims drop, while job openings rise

WASHINGTON — Companies are laying off fewer workers and advertising more job openings, two encouraging signs that arrived a day before the government issues the September jobs report.

But economists say employers aren’t ramping up hiring fast enough to reduce the unemployment rate, now 9.6 percent. Some economists expect the rate to top 10 percent by early next year.

Companies at least aren’t laying off so many workers. Fewer people applied for unemployment benefits for the fourth time in five weeks, the Labor Department said Thursday.

A separate report showed job openings rose in August for the second straight month. Private-sector employers advertised the most number of available jobs since November 2008, the report said.

But the increases aren’t enough to turn the job market around anytime soon, economists said.

“The data that we’re seeing is still consistent with a very slow jobs recovery,” said Michelle Meyer, an economist at Bank of America Merrill Lynch.

Meyer forecasts that the economy will generate about 50,000 jobs a month for the next six months. That isn’t enough to keep up with population growth, much less absorb the nearly 15 million unemployed. Bank of America-Merrill Lynch expects the unemployment rate to reach 10.1 percent by the middle of next year.

On Friday, economists forecast the government will report that private employers added a net total of 75,000 jobs in September, about the same as the 67,000 added in August. The jobless rate is expected to tick up to 9.7 percent from 9.6 percent.

With job creation so weak, the Federal Reserve is likely to take additional steps to boost the economy. The most widely expected move, which the Fed could launch at its meeting next month, would be to buy government debt in an effort to push interest rates down further.

That, in turn, could spur more borrowing by businesses and consumers.

In the mean time, applications for jobless aid are falling. They dropped by 11,000 to a seasonally adjusted 445,000 last week, the Labor Department said. It’s the lowest level since the week ending July 10 and down from 504,000 initial claims in mid-August — the high point for the year.

Weekly unemployment applications have rarely fallen below 450,000 this year, and never for longer than two weeks. Economists say a sustained drop below 425,000 would signal employers are stepping up hiring.

The department also said job openings rose in August for the second straight month to 3.2 million. Private-sector openings increased to their highest level in 21 months.

The department’s Job Openings and Labor Turnover survey also said that private-sector layoffs plummeted to 1.6 million in August, the lowest monthly total in more than four years.

Separately, retailers reported surprisingly strong sales gains for September due to healthy back-to-school shopping. The results raised hopes for a positive holiday shopping season.

Numerous chains reported better-than-expected results, including Macy’s Inc., Victoria’s Secret and Bath and Body Works parent Limited Brands Inc. and Abercrombie & Fitch.

The claims report, while volatile, is considered a real-time snapshot of the job market. It is also a measure of the pace of layoffs and an indication of companies’ willingness to hire.

Claims have fallen sharply since June 2009, the month the recession ended. They topped 600,000 at the end of that month.

But the improvement has largely stalled this year. Initial claims have generally fluctuated around 450,000 since January. Any sustained decline below that level would be a positive sign that the job market is improving.

Some companies are hiring despite the weak economy. Daryl Dulaney, chief executive of Siemens Industry Inc., says his company’s parent, Siemens USA, has 1,200 job openings. About 40 percent require an engineering or information technology background, and the company has had difficulty finding qualified candidates, despite the high jobless rate, Dulaney said.

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