Unemployment Apps Fall during October’s Third Week Signifying Modest Hiring
The Department of Labor reported that applications for unemployment benefits fell by 23,000 last week, bringing the four-week average down to 368,000. The updated statistics seem to have become more stable after problems with seasonal adjustments over the prior two weeks. For reference, when jobless claims fall below 375,000 it suggests that hiring is strong enough to lower the rate of unemployment.
Throughout 2012, employers have added an average of almost 150,000 per month, which is enough to lower the unemployment rate only marginally. Applications have fluxed between 360,000 and 390,000 per month since the beginning of the year. So far, the unemployment rate has fallen only 0.5 percent this year, dropping from 8.3 percent to 7.8 percent.
Tepid economic growth has led to hesitation on the part of employers in adding more workers while others are concerned about tax increases and spending cuts that will result from a lack of Congressional action on the budget. However, retail sales were found to have increased at a steady pace in September plus home sales and residential construction have increased throughout the year; no doubt buoyed by gains in home prices and low mortgage rates.
With the growth of the economy slowed to a crawl (an annual rate of 1.3 percent in Q2), the economy is not growing fast enough to generate healthy hiring numbers. And most economists foresee a growth rate of no higher than 2 percent for the remainder of the year.