New jobless claims drop to 514K

UPDATED:

WASHINGTON (AP) — The number of newly laid-off workers filing claims for unemployment insurance has fallen to the lowest level since early January, a sign the labor market is slowly improving.

And consumer price pressures remained mild in September as Americans slowly regain their appetite to shop amid a fledgling economic recovery.

The Labor Department said Thursday that first-time claims for jobless benefits dropped to a seasonally-adjusted 514,000 from an upwardly revised 524,000 the previous week. The fifth decline in six weeks was below Wall Street economists’ forecasts of 525,000, according to Thomson Reuters.

The four-week average, which smooths fluctuations, fell for the sixth straight time to 531,500. That’s the lowest since January and about 105,000 below the peak reached in early April.

Economists closely watch initial claims, which are considered a measure of layoffs and the willingness of companies to add jobs.

The steady decline in claims indicates that companies are shedding fewer workers. Many economists expect that job losses will fall below 200,000 in October from 263,000 in September. That’s still a large amount, but would be the fewest in a year.

In a separate report, the Labor Department said consumer prices rose 0.2 percent last month, matching analysts’ expectations. Prices excluding the volatile energy and food categories also rose 0.2 percent, slightly higher than the 0.1 percent increase analysts had forecast.

Over the past 12 months, consumer prices fell 1.3 percent, reflecting a severe recession that has kept a lid on inflation across a wide range of products and services. Excluding food and energy, prices rose 1.5 percent.

The absence of price pressures has been good news for cash-strapped households, but it means no cost-of-living increase next year for the more than 57 million Americans receiving Social Security and other government benefits, the first time that’s happened in over 30 years.

However, President Barack Obama on Wednesday urged Congress to provide a one-time payment of $250 to help senior citizens cope with the absence of higher benefit checks next year. Such a payment would cost the government about $13 billion.

Employers have eliminated a net total of 7.2 million jobs since the recession began in December 2007, sending the unemployment rate to a 26-year high of 9.8 percent.

Despite the improvement, the weekly tally of jobless claims remains above the 325,000 associated with a healthy economy.

The tally of people continuing to claim benefits dropped by 75,000 to 5.99 million, its first time below 6 million since the week of March 28. Continuing claims data lags initial claims by a week.

Many of those recipients have moved onto extended benefit programs. Congress has added about 53 weeks of emergency benefits on top of the 26 weeks typically provided by states. When extended programs are included, a total of 8.87 million people received benefits in the week ending Sept. 26, the latest week data is available. That’s down about 40,000 from the previous week.

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