Thread: Jobless Claims Still Gaining;

Jobless Claims Still Gaining; Productivity Up 6.2 Percent

Published: Thursday, 4 Feb 2010 | 9:38 AM ET

By: Reuters

More U.S. workers unexpectedly filed for jobless benefits last week, but another hefty gain in productivity in the fourth quarter offered hope that companies were getting close to adding payrolls.

Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 480,000 in the week ended Jan. 30, the Labor Department said on Thursday.

That was above market expectations for 460,000.

In another report, the department said non-farm productivity grew at a 6.2 percent rate in the fourth quarter as employers ramped up output at the quickest pace in six years and kept a tight lid on costs.

Analysts had expected productivity, which measures the hourly output per worker, to rise at a 6.0 percent rate after gaining 7.2 percent in the third quarter.

""The big news in recent jobless data was claims moving below 500,000, though the numbers remain sticky. That suggests that any improvement in employment will be slow," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.

Unemployment, which is lagging the broader economic recovery, is one of President Barack Obama's toughest challenges. Unhappiness over unemployment cost Obama's Democrats a crucial Senate seat last month and threatens big losses for the party in the November congressional elections.

The government will on Friday release its closely watched employment report for January. A Reuters survey predicted non-farm payrolls grew 5,000 after a surprise 85,000 drop in December.

The unemployment rate, however, is expected to edge up to 10.1 percent in January from 10 percent.

The four-week moving average for new claims rose 11,750 to 468,750 last week, the Labor Department said. The four-week moving average, considered a better gauge of underlying trends, rose for a third week after falling for 19 weeks.

But the productivity report offered a ray of hope. Despite the worst economic downturn since the Great Depression, productivity has grown for five straight quarters as employers slashed costs, mostly head count.

Some analysts believe companies cannot continue to boost output without starting to hire new workers.

However, others reckon companies will hold off new hires, while gauging the strength of the economic recovery and instead opt to extend working hours and make temporary workers permanent staff.

The economy grew at a 5.7 percent pace in the fourth quarter, its fastest clip in six years.

Total non-farm output grew at a 7.2 percent rate in the final three months of 2009, the fastest rate since the third quarter of 2003, accelerating from a 2.2 percent pace in the third quarter.

Hours worked rose at a 1.0 percent rate in the fourth quarter, the first increase since the second quarter of 2007 and the fastest pace since the fourth quarter of 2006.

Unit labor costs, a gauge of inflation and profit pressures closely watched by the Federal Reserve, fell a steeper than expected 4.4 percent after declining 1.5 percent in the third quarter. Analysts had expected unit labor costs to fall 2.5 percent in the fourth quarter

Depressed unit labor costs suggest scant inflation from wages, which should help the Fed to honor its promise to keep overnight interest rates low for an extended period to nurture the recovery.

http://www.cnbc.com/id/35233130

More U.S. workers unexpectedly filed for jobless benefits last week, but another hefty gain in productivity in the fourth quarter offered hope that companies were getting close to adding payrolls.

What sort of idiot wrote this? Increased productivity means doing the same job with less workers.

Unemployment compensation ends at the end of February, so there will be well over 1,000,000 American workers penniless at that point.. And in March, there will be 3,000,000. The Unemployment representative here in NC said my past experience in the floor covering business was now useless... that anything related to construction would be the last to recover. Do you think that has anything to do with all the illegals that drive around NC in their work vans with plenty to do?