Ahead of the Bell: US Unemployment Benefits
WASHINGTON (AP) — The number of people seeking unemployment benefits likely fell last week to a level that signals only modest hiring.
Economists forecast that weekly applications dropped to a seasonally adjusted 370,000, down from 382,000 the previous week. The Labor Department will release the report at 8:30 a.m. EDT Thursday.
Applications jumped by 15,000 two weeks ago, the biggest increase in nearly two months. But the gain was driven by the fallout from Hurricane Isaac, which disrupted economic activity in nine states and boosted applications by 9,000.
Weekly unemployment benefit applications are a measure of the pace of layoffs. They have been near 370,000 since the spring.
When applications fall consistently below 375,000, it usually indicates that hiring is strong enough to lower the unemployment rate. But even though layoffs remain at low levels, overall hiring has been weak.
Employers added only 96,000 jobs last month, below the 141,000 in July and much lower than the average 226,000 added in the first three months of the year. Recent job gains are barely enough to keep up with the growth of the working age population and aren't enough to rapidly drive down unemployment.
The unemployment rate dropped in August to 8.1 percent from 8.3 percent, but only because the number of people working or looking for work fell.
A separate monthly report from the Labor Department earlier this month showed that layoffs were at the lowest level in July in the 11 years the government has tracked the data.
The economy isn't growing fast enough to support much more hiring. It grew at a tepid 1.7 percent annual rate in the April-June quarter, down from 2 percent in the January-March quarter and 4.1 percent in the final three months of last year.
Growth isn't likely to get much better for the rest of this year. Economists expect it to grow at a roughly 2 percent pace. That's typically too weak to create enough jobs to lower the unemployment rate.
High unemployment and sluggish growth prompted the Federal Reserve to announce several major steps to boost the economy last week. Chairman Ben Bernanke said the Fed will buy $40 billion of mortgage-backed securities a month until there is "substantial" improvement in the job market.
Bernanke said at a news conference that high unemployment is "a grave concern" that causes "enormous suffering."