WASHINGTON – The number of people seeking U.S. unemployment benefits dropped 26,000 last week to a seasonally adjusted 323,000, the lowest level in three months as layoffs remain at pre-recession levels.
The Labor Department said Thursday that the four-week average of applications, a less volatile measure, fell slightly to a seasonally adjusted 336,500.
That average indicates that companies are cutting few jobs and anticipate steady economic growth despite the winter slowdown. Applications are a rough proxy for layoffs.
A total of 3.4 million Americans received unemployment benefits as of Feb. 15 — the latest period for which figures are available — down from 3.49 million the previous week.
On Friday, the Labor Department will release its February jobs report after what has been a sluggish winter for the economy.
Employers added just 113,000 jobs in January. That followed a gain of only 75,000 in December. Those figures are about half the monthly pace of the past two years.
Economists have estimated that 145,000 jobs were added last month. But there are signs that this forecast might be optimistic after a pair of lacklustre reports released Wednesday suggested that winter storms hampered hiring in February.
A survey by payroll processor ADP said private businesses added just 139,000 jobs last month. But that figure does not include state, local and federal government workers, unlike the upcoming Labor Department report. Most economists predict that governments shed workers in February.
And a survey of service companies by the Institute for Supply Management found that its measure for hiring plunged 8.9 percentage points to 47.5, evidence that many companies let go of employees in February. Any reading above 50 indicates expansion in the trade group’s index.
On the positive side, the unemployment rate fell to a five-year low of 6.6 per cent in January from 6.7 per cent, as more of those out of work found jobs. Hiring rose in manufacturing and construction, two higher-paying industries that are key drivers of growth.
But the harsh winter weather appears to have kept the economy in check. Sales of existing homes plunged in January to the slowest pace in 18 months, hut by the weather, higher interest rates and rising home prices. Signed contracts to buy existing homes have stayed flat for February and January, a sign that the weak sales could persist through March and April.
Consumer spending rose 0.4 per cent in January, but much of that growth came from people paying higher heating bills. Auto purchases fell, as did spending on non-durable goods such as clothing.
With slow job growth, the housing recovery slowing and consumers unexcited to shop, economists have trimmed their forecasts for the January-March quarter. Most now expect growth in the first three months of the year at an annual rate of 2 per cent or below, down from forecasts of about 2.5 per cent at the beginning of the year.
Most expect growth to then pick up and reach nearly 3 per cent for the full year, up from under 2 per cent in 2013.