WASHINGTON – For the second week in a row, fewer people filed new claims to collect unemployment benefits (search), a hopeful sign that America's businesses are feeling more confident that the economy's recovery will be lasting.
The Labor Department (search) reported Thursday that for the work week ending Jan. 17, new applications filed for unemployment insurance dipped by a seasonally adjusted 1,000 to 341,000, the lowest level since the end of December. The week before claims fell by 14,000, a sharper decline than the government first estimated a week ago.
The latest snapshot of jobless claims was better than analysts were expecting. They were forecasting a rise of around 2,000 for last week.
Meanwhile, the more stable four-week moving average of claims, which smooths out week-to-week fluctuations, dropped by 3,250 last week to 344,500. That was the lowest level since the week ending Jan. 27, 2001 -- seven days after President Bush's inauguration.
The four-week moving average of jobless claims has been running below 400,000 for 16 straight weeks. Economists say when claims are below 400,000 it can be viewed as a sign that the job market -- which is still fragile -- is turning a corner.
Still, economists wants to see more improvements -- namely stronger job growth.
In December, the nation's payrolls grew by just 1,000, disappointing analysts who were forecasting stronger growth. The economy has lost 2.3 million jobs since President Bush took office, something Democrats vying to replace Bush in the White House like to point out to voters. Factory workers have been hardest hit, seeing millions of job evaporate.
Although the unemployment rate fell to 5.7 percent in December it was mainly because thousands of people gave up looking for work.
Federal Reserve (search) policy-makers -- who are keeping a close eye on the labor market -- are expected to hold a main short-term interest rate at a 45-year low of 1 percent when they meet next week.
The Fed has leeway to hold rate near rockbottom levels for some time because inflation is under control. Economists believe the Fed wants to see the labor market in much stronger shape before nudging up short-term rates. Against that backdrop, policy-makers might opt to leave rates alone throughout this year and into part of 2005, some economists say.
Keeping rates low might motivate consumers and businesses to spend and invest more, lifting economic growth.
Thursday's report also showed that the number of unemployed people collecting jobless benefits for more than a week rose by 17,000 to 3.1 million for the week ending Jan. 10, the most recent period for which that information is available. This suggests that jobs are still hard to find for some workers.
Economists believe that as companies' profits improve, they will feel even more comfortable about ramping up investment and hiring new people, two crucial ingredients to the recovery's staying power.