Posted: Thursday, February 28th 2013 at 8:46am
UI claims drop last week; 4th quarter economic growth weakest in 2 years
By The Associated Press
WASHINGTON (AP) -- The number of Americans seeking unemployment aid fell 22,000 last week to a seasonally adjusted 344,000, evidence that the job market may be picking up. Meanwhile, the U.S. economy grew at a rate of 0.1 percent in the fourth quarter, the weakest showing in nearly two years.
The four-week average of applications dropped 6,750 to 355,000, the Labor Department said Thursday. That was the first drop in three weeks.
Weekly applications are a proxy for layoffs. When they decline, it suggests companies are cutting fewer workers and may be more willing to hire.
The four-week average has steadily declined since November. Since then, it has fallen almost 11 percent. At the same time, employers have added an average of 200,000 jobs per month from November through January. That's up from about 150,000 in the previous three months.
In January, the economy added 157,000 jobs. The unemployment rate ticked up to 7.9 percent from 7.8 percent in December. Economists think the rate will slowly decline if hiring continues at last year's monthly pace of 180,000. The unemployment rate fell 0.7 percentage point in 2012.
The outlook for the U.S. economy brightened this week after reports showed that Americans are more confident and are buying more new homes. Home prices are also rising steadily, and banks are lending more. Such improvements suggest that the economy is resilient enough to withstand automatic spending cuts that are scheduled to kick in Friday.
The spending cuts could slow economic growth and cost 700,000 jobs, according to the Congressional Budget Office. They could also reduce unemployment benefit checks for those out of work for more than six months by about 11 percent, according to the National Employment Law Project. Benefits average about $320 per week nationwide.
The U.S. economy grew at a 0.1 percent annual rate from October through December, the weakest performance in nearly two years.
The Commerce Department's revision to fourth-quarter growth was only slightly better than its initial estimate that the economy shrank at a rate of 0.1 percent.
The upward revision reflected strength in exports and business investment. Analysts believe growth is rebounding in the current quarter despite higher taxes and government spending cuts set to start on Friday. A steady rebound in housing and solid business and consumer spending is expected to push growth higher in the current quarter.
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