Job Outlook Turns Mixed Ahead Of Friday's Report
As investors await Friday's announcement of December job growth, several reports out Thursday show a mixed picture on employment, a key factor in consumer spending and the overall health of the U.S. economy.
The number of U.S. workers filing new claims for jobless aid tumbled by 21,000 last week, while the number of people staying on the benefit rolls rose to its highest level in more than two years, a government report on Thursday showed.
Several several private surveys also showed uneveness in employment. With record high gas prices, a weak housing market, and signs of a slowing consumer, investors are watching for signs of strain in the labor market.
First-time claims for state unemployment insurance benefits fell to a seasonally adjusted 336,000 in the week ended Dec. 29, from an upwardly revised 357,000 the prior week, the Labor Department said.
Wall Street economists forecast new claims to drop to 345,000 from the originally reported 349,000 in the week ended Dec. 22.
A Labor Department spokesman attributed much of the steeper decrease in initial claims to the holiday shortened workweek which affected the ability of states to estimate data. "As you can imagine Christmas week is a little bit tricky," he said.
Several states reported large declines in claims because their unemployment offices were closed for two days last week -- Christmas eve and Christmas -- allowing less time for laid off workers to file for benefits.
But still, the prior week's upward revision brought claims that week to the highest level since October 2005, when layoffs surged in the aftermath of a series of devasting hurricanes along the Gulf Coast.
The four-week moving average of new claims - more reliable because it irons out weekly fluctuations - inched down to 343,750 from 344,500.
The number of people remaining on the benefit rolls after drawing an initial week of claims rose for the fourth straight week, climbing to 2.76 million in the week ended Dec. 22, the latest week these figures were available.
Separately, The ADP emloyment report showed the U.S. private sector likely added 40,000 jobs in December. This suggests nonfarm payrolls grew by about 65,000, close to the 58,000 now expected.
Meanwhile, a survey from outplacement firm Challenger Gray & Christmas showed planned layoffs fell 39.3 percent in December from the previous month and were down 18.7 percent from December 2006, to wrap 2007 with a total planned job cuts figure 8.5 percent lower than in 2006.
However, Monster, a global online recruiting firm, said its Employment Index fell to 169 points in December, from 183 in November. The index was 167 a year ago and 168 in January 2007.
Layoffs Hit Hard in Financial Sector
According to the Challenger report, U.S. companies' December planned job cuts in U.S. companies totaled 44,416, down from 73,140 in November, and the year total was 768,264, down from 839,822 in 2006.
According to the survey, the financial sector suffered the most planned job cuts through 2007, a result of the credit crisis ignited by defaults in subprime loans. Jobs shed in financial industries totaled 153,105, more than three times the amount at the end of 2006, and nearly twice as much as the second-highest sector, automotive, which lost 78,880 jobs in 2007.
There could be even more pain ahead in the financial sector, with layoffs reported to be in the works at Merrill Lynch and Citigroup.
Also, last week, Midwest regional bank KeyCorp said it plans to eliminate 1,040 jobs, including 700 workers and 300 open positions, due to problems in its homebuilder and real estate lending businesses.
As for the Monster survey, said there was some seasonal slowness skewing its data.
"Approximately half of the index's decline in December 2007 can be attributed to seasonality as employers naturally scale back their hiring activities during the final month of the year," said Steve Pogorzelski, a vice president at Monster Worldwide, in a statement.
The seasonal slowdown has traditionally been followed by a spike in January, with the exception of 2007. "It will be interesting to see the index's January 2008 results when they
are released next month," he said.
Reuters and AP contributed to this report.