Gauge of U.S. layoffs falls to pre-recession level

Thu Aug 8, 2013 10:28am EDT
 
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By Jason Lange

WASHINGTON (Reuters) - A gauge of the trend in layoffs of American workers fell last week to its lowest since before the 2007-09 recession, a hopeful sign for the U.S. economy.

The four-week average of new claims for state jobless benefits dropped to 335,500, the Labor Department said on Thursday. The reading has not been that low since November 2007, just before the United States fell into a calamitous recession.

Now it appears that a long cycle of aggressive layoffs, which had fueled a surge in unemployment and helped shape two presidential elections, is over.

Still, employers have appeared reticent to hire, and Thursday's data still pointed to only modest economic growth. Last week, initial jobless claims edged 5,000 higher to 333,000, a little less than expected.

"The overall economy and the labor market are improving at a moderate pace," said Lindsey Piegza, chief economist at brokerage Sterne Agee & Leach in Chicago.

The pull-back in layoffs since 2009 has helped bring about a substantial fall in the jobless rate, and the trend in jobless claims could make the Federal Reserve more comfortable in unwinding the nation's last giant economic stimulus program.

Many economists expect the U.S. central bank to begin reducing its massive bond-buying stimulus program as soon as next month. The Fed currently buys $85 billion a month in bonds to push borrowing costs lower and help boost economic recovery.

While layoffs are roughly half their level in early 2009, the recovery in job creation has been more lackluster.   Continued...

 
A woman stands with her paperwork as she speaks with a recruiter while attending a job fair in New York, June 11, 2013. REUTERS/Lucas Jackson