More Americans than forecast filed claims for unemployment insurance payments last week, according to government figures that were estimated because some state agencies closed during the holidays.
Applications for jobless benefits increased 10,000 to 372,000 in the week ended Dec. 29, the Labor Department reported today in Washington. Economists forecast 360,000 claims, according to the median estimate in a Bloomberg survey. A report from the ADP Research Institute showed companies added more workers than projected in December.
“The underlying claims trend is still really low,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida. “There’s a lot of volatility this time of year. Job destruction is really not a problem right now, it’s really hiring that’s the issue.”
The four-week average of claims, a less volatile measure, was little changed, indicating employers held on to current staff at the end of 2012 even as Congress made little progress in budget talks. The deal passed by lawmakers this week averted tax increases on about 99 percent of households while failing to reach a bargain on spending and debt.
The data today from the Roseland, New Jersey-based ADP Research Institute indicated the job market finished 2012 with momentum. The 215,000 increase in employment was the group’s largest since February and followed a revised 148,000 gain the prior month that was larger than initially reported.
Stocks fell as concern that yesterday’s rally may have been overdone offset the better-than-projected reading from ADP. The Standard & Poor’s 500 index declined 0.2 percent to 1,459.51 at 9:48 a.m. in New York. The 500 Index surged 2.5 percent yesterday, the biggest one-day jump since December 2011, after Congress passed the bill averting tax increases and government spending cuts slated to take effect this year.
Another report showed consumer sentiment last week reached an eight-month high, reflecting broad-based gains that indicated even wealthy Americans were less concerned about tax increases and fiscal policy challenges heading into 2013. The Bloomberg Consumer Comfort Index rose to minus 31.8 in the period ended Dec. 30, its highest since April, from minus 32.1 a week earlier.
For the year, the index climbed 12.9 points, the biggest annual improvement since 1998. Americans earning $100,000 or more reported their most optimistic reading in more than two years.
Claims estimates ranged from 340,000 to 385,000 in the Bloomberg survey of 35 economists. The prior week’s applications were revised up to 362,000 from an initially reported 350,000, reflecting a more accurate count after 19 states were estimated that week.
The Labor Department official today said the number of applications reflects the effects of the holidays. Eight states and territories provided their own estimates last week and the Labor Department projected the reading for one additional state.
The four-week moving average of claims, a less-volatile measure, rose to 360,000 from 359,750.
The report comes one day before the Labor Department’s monthly employment figures. Employers probably added jobs in December at about the same pace as the prior month, showing the labor market held up as lawmakers struggled to resolve the fiscal impasse, economists said before the report.
Payrolls rose by 151,000 workers after a 146,000 gain in November, according to the median forecast of economists surveyed by Bloomberg ahead of the figures due tomorrow. The unemployment rate may have held at 7.7 percent, the lowest since December 2008.
The number of people continuing to collect jobless benefits climbed by 44,000 to 3.25 million in the week ended Dec. 22, today’s report showed. Continuing claims don’t include workers receiving extended benefits under federal programs.
Job-hunters who have used up their traditional benefits and are now collecting emergency and extended payments decreased by about 72,800 to 2.07 million in the week ended Dec. 15. Congress this week authorized another year of federal benefits for the long-term unemployed, which were set to expire this month.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
In 2012, employers have hired about 151,500 workers a month on average, Labor Department data showed. Monthly payroll additions averaged about 153,300 in 2011.
Labor market progress is more pronounced when considering the jobless rate, which fell 0.8 percentage point to 7.7 percent from the end of 2011 through November.
Federal Reserve policy makers last month linked the central bank’s main interest rate to unemployment and inflation and expanded an asset purchasing program in an effort to spark the economy.
Interest rates will stay low “at least as long” as the jobless rate remains above 6.5 percent and if inflation “between one and two years ahead” is projected to be no more than 2.5 percent, the Federal Open Market Committee said in December.
Service providers including uniform supplier Cintas Corp (CTAS:US). and payroll processor Paychex Inc. are among those reporting few signs that companies are expanding their worker ranks given the uncertainty over the outlook for fiscal policy late last year.
Small business sentiment in particular remains weak, Paychex Chief Executive Officer Marty Mucci said.
“We start to see an improvement, kind of, in the feeling in the economy and then it gets back to kind of standing on the sidelines,” Mucci said on a Dec. 20 earnings call. “We need to see not only new business starts, but a little bit more investment and consumer confidence buying things, then people will open up.”
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