WASHINGTON – The number of newly laid-off workers filing claims for unemployment benefits fell to the lowest level in more than five years last week, providing strong evidence that the labor market is shaking off the effects of a string of devastating hurricanes.
The Labor Department reported Thursday that applications for unemployment benefits dropped by 35,000 to 291,000, the smallest number since Sept. 23, 2000, when the economy was in the concluding months of the longest economic expansion in history.
The decline of 35,000 claims was much better than Wall Street had been expecting and bolstered the belief that the labor market is on the mend after a rough period in the fall when Gulf Coast hurricanes caused the loss of more than 600,000 jobs over a period of four months.
The total for weekly jobless claims was far below the peak of 435,000 set the week ending Sept. 17, a period when the number of job losses attributed to Hurricane Katrina totaled 108,000.
The government stopped tracking the impact of Katrina, Rita and Wilma last week because the weekly increase in storm-related layoffs had dwindled to slightly more than 1,000. But for the four months that the storms were tracked, the combined number of layoffs blamed on the hurricanes totaled more than 600,000.
The better-than-expected improvement in the layoff picture for last week was certain to raise hopes for a solid performance in job growth for December.
Analysts are predicting that the economy probably created 200,000 new jobs last month, with the unemployment rate probably holding steady at 5 percent. That would follow 215,000 new jobs in November after two months in which job growth had stalled because of the onslaught of massive layoffs in Gulf Coast states.
Economists are predicting that 2006 will represent another year of steady growth in jobs of around 175,000 per month. That reflects their belief that the economy will keep growing at a solid pace this year as business spending to expand and modernize production facilities offsets expected slower growth in housing sales and overall consumer spending.
The Federal Reserve has raised interest rates 13 consecutive times and is expected to boost rates again at Alan Greenspan's last meeting on Jan. 31 to make sure that inflation remains in check. But the Dow Jones industrial average shot up by 130 points on Tuesday following release of Fed minutes of the December meeting that suggested the rate hikes are drawing to a close.