Jobless Claims Continue to Fall; Wholesale Stockpiles Surge

Decrease In Unemployment Claims Shows Economy Continuing To Improve
Spencer Platt/Getty Images
By Jason Lange

WASHINGTON -- The number of Americans filing new claims for unemployment benefits fell last week to nearly its lowest level since before the 2007-09 recession, a sign of growing steam in the U.S. labor market.

Initial claims for state unemployment benefits dropped 1,000 to a seasonally adjusted 287,000 in the week ended Oct. 4, the Labor Department said Thursday. Economists had expected claims to rise.

The data adds to the view that strength is building in the U.S. economy. "The labor market is entering into a potential boom," said Joseph LaVorgna, chief U.S economist at Deutsche Bank (DB) in New York.

Still, Federal Reserve officials remain concerned about persistently low rates of inflation and aren't seen in a rush to hike interest rates with the economies of key trading partners flagging.

A separate report showed U.S. wholesale inventories rose by the most in four months in August, a sign the economy may have grown more than expected in the third quarter.

Many economists think the economy grew at an annual rate of around 3 percent in the July-September period, much faster than average rates over the last few years.

U.S. stocks opened lower as investors took profits after a big rally Wednesday that had been fueled by minutes of the Fed's last policy meeting, which suggested an interest rate hike could be delayed because of growing concerns on the international outlook.

The U.S. dollar, which had been on a long run up through last week, slid to a three-week low against the Japanese yen Thursday, while yields on U.S. government debt rose modestly.

Jobless claims have fallen steadily since the nation emerged from the recession and are currently lower than they were before the country's economic crisis began. Indeed, the level of claims last week was just 8,000 above a 14-year low reached in July.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 7,250 to 287,750, its lowest level since 2006.

The Labor Department said there were no special factors influencing the state level claims data.

The report showed the number of people still receiving benefits after an initial week of aid dropped 21,000 to 2.38 million in the week ended Sept. 27.

"The gradual improvement in continuing claims is particularly encouraging and is consistent with recent declines in the unemployment rate, suggesting that unemployed workers continue to find gainful employment," said Gennadiy Goldberg, U.S. strategist at TD Securities in New York.

-With additional reporting by Richard Leong in New York.

10 PHOTOS
9 Numbers That'll Tell You How the Economy's Really Doing
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Jobless Claims Continue to Fall; Wholesale Stockpiles Surge
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.
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