Applications for US unemployment benefits probably rose last week, economists forecast

MarketsAssociated Press

The U.S. Labor Department reports on the number of people who applied for unemployment benefits last week. The report will be released Thursday at 8:30 a.m. Eastern.

SMALL REBOUND: Economists forecast that weekly applications rose 6,000 to a seasonally adjusted 289,000, according to a survey by the data firm FactSet.

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Last week included the President's Day holiday, which can cause some volatility in the data, as most state unemployment offices were closed. The government reported last week that applications plummeted 21,000 to 283,000, a sign employers are holding onto their staffs and may even be stepping up hiring.

Applications below 300,000 are typically consistent with healthy job gains.

The weekly applications are a proxy for layoffs. The four-week average of applications, a less-volatile measure, has fallen 16 percent in the past year to 283,250. That is a very low level historically.

HIRING BURST: The steady decline in applications has coincided with a big step-up in hiring. Employers added more than 1 million jobs from November through January, the best three-month pace since 1997.

And more than 3.2 million jobs have been created in the past year. That has helped lower the unemployment rate to 5.7 percent in January from 6.6 percent 12 months earlier.

The strong job gains are showing some signs of finally lifting paychecks for more workers. Average hourly pay rose 0.5 percent in January, the most in six years, the Labor Department said earlier this month. While economists cautioned against reading too much into one month's figure, it suggested employers may finally feel the need to raise wages to attract new workers and keep the ones they have.

Big companies like Aetna and the Gap have already raised wages. Last week, Wal-Mart, the world's largest retailer, said it would raise the base pay for its employees to $9 an hour later this year and $10 next February. Retailer TJX followed with its own pay hike announcement Wednesday.

Federal Reserve Chair Janet Yellen said Tuesday that there has been broad improvement in the job market since last summer. Yet she also noted that "wage growth remains sluggish" and the number of Americans either working or looking for work is low by historical standards. The Fed is closely watching the jobs data as it considers when to begin raising short-term interest rates.

"Considerable progress has been achieved in the recovery of the labor market, though room for further improvement remains," Yellen said in testimony before a Congressional panel.