Ahead of the Bell: US Unemployment Benefits
WASHINGTON (AP) — The number of people applying for unemployment benefits likely fell last week, one week after Superstorm Sandy drove applications to their highest level in 18 months.
Economists forecast that weekly applications dropped 34,000 to a seasonally adjusted 405,000, according to a survey by FactSet. The Labor Department will release the report at 8:30 a.m. EST Wednesday.
Labor Department officials have said that the storm will likely distort unemployment benefit applications through the end of the month.
Superstorm Sandy slammed into the East Coast on Oct. 29, closing many businesses and cutting off power to more than 8 million homes in 10 states. People can claim unemployment benefits if their workplaces are forced to close and they aren't paid.
Before the storm, weekly applications had fluctuated this year between 360,000 and 390,000. Meanwhile, employers have added an average of nearly 157,000 jobs a month. That's barely enough to lower the unemployment rate, which was 7.9 percent in October.
There are some signs that the job market is improving. Employers added 171,000 jobs in October and hiring in August and September was stronger than first estimated, the department said earlier this month. The economy gained an average of 174,000 jobs a month in the July-September quarter. That's up from 67,000 a month in April through June.
The unemployment rate rose slightly in October because more Americans began looking for work. That suggests some felt their chances of finding a job had improved. Not all of them were hired, which pushed up the unemployment rate. The government only counts people as unemployed if they are actively searching for work.
Federal Reserve Chairman Ben Bernanke said in a speech Tuesday that despite some improvement, the job market is still weak. According to minutes of the Fed's last policy meeting, the central bank may unveil a bond buying program in December to drive down long-term interest rates.
One bright spot in the economy is the steady recovery in housing. Economists hope that it could lead to more hiring. Homebuilders broke ground last month on the most new homes and apartments in more than four years. Builders are also more optimistic: a measure of their confidence increased this month to its highest level in 6½ years.
Sales of previously occupied homes have risen nearly 11 percent in the past year. And home prices are also increasing steadily, which makes homeowners feel wealthier and could encourage them to spend more.
The economy is expanding at a modest pace. Many economists now predict growth at an annual rate of roughly 3 percent in the July-September quarter, up from the initial estimate of 2 percent reported last month. The government releases its second estimate for third-quarter growth on Nov. 29.
Still, many economists say the economy is growing in the current October-December quarter at an annual rate below 2 percent — too slow to make much of a dent in unemployment.