U.S. unemployment claims dropped to their lowest level in two years last week, offering some good news to close out a year marked by roller-coastering economic indicators.
The U.S. Department of Labor reported today that 388,000 (seasonally adjusted) new claims for unemployment were filed last week, a drop of 34,000 from the previous week. Reuters reported that the average of economists estimates was 415,000. The one-week peak came in March 2009 when 651,000 people filed for initial benefits.
Some economists questioned the accuracy of the numbers, pointing out that most state offices were closed for at least part of the week and that holiday travel and other factors may have deterred some from filing. Government economists said the seasonal adjustments takes those issues into account.
In any case, the critical issue is the overall trend in the numbers and, as one look at the accompanying chart for 2010 shows, it is decidedly down. Benjamin Reitzes, an economist at BMO Capital Markets, told the Associated Press, “If we can continue this improving trend, we’ll likely see stronger job growth in 2011.”
As the various measures of consumer optimism suggest, Americans are hopeful, but uncertain about the economy in 2011.
The Conference Board, a private business research group, said in its monthly confidence report, “Those expecting an improvement in business conditions over the next six months edged up to 16.6 percent from 16.4 percent, while those anticipating business conditions will worsen edged down to 12.1 percent from 12.4 percent. Consumers remained mixed about future job prospects. Those anticipating fewer jobs in the months ahead increased to 19.5 percent from 19.1 percent, while those expecting more jobs declined to 14.3 percent from 15.1 percent.”
Americans can be forgiven if they are skeptical of the future. The national unemployment rate is all but unchanged over the last 12 months. It stood at 10 percent in December of 2009 and economists are expecting it will come in at 9.8 percent for December 2010 when the government releases its monthly employment report on Jan. 7. If it does, it will be the second month in a row. In June, the unemployment rate dipped to 9.5 percent, then crept back up during the fall.
No wonder that consumer confidence has seesawed. A year ago, it stood at 53.6. This December, The Conference Board’s survey puts it at 54.3, nine points below its peak in May.
As challenging as the year has been, there has been improvement. A year ago, the Monster Employment Index (a measure of job offerings) was 115. In November, the most recent month available, it was 138. Job growth, as measured by the U.S. Bureau of Labor Statistics, went from a negative to a positive. In 2009, 11 of 12 months saw job cuts. This year, only three months had losses, and most of that was from the layoff of temporary Census workers. Economists expect that the December jobs report will show about 111,000 new jobs during the month.
CareerBuilder predicts that hiring will continue to improve next year. Its latest survey found 24 percent of employers planning to hire full-time, permanent employees in 2011, up from 20 percent in 2010 and 14 percent in 2009.
Those expecting to reduce staff declined to 7 percent from the 9 percent who expected to do that in 2010 and the 16 percent the year before that.
- Hiring likely to be strongest in the West and weakest in the Midwest and South, though not by much.
- Concern is growing that with an improving economy top talent may make a job change, so 61 percent of employers are planning raises in the new year. Last year 57 percent expected to give salary increases.Ten percent of those planning raises say they’ll be at least 5 percent.
- Perhaps it’s a sign of more aggressive talent hunting or a shortage of some types of skilled workers, but 31 percent of employers said they are sweetening their job offers next year. Like those expecting to improve comp for existing staff, most improvements will be in the 1-3 percent range; 8 percent, though, anticipate a least a 5 percent bump.