WASHINGTON - A raft of data released Thursday reinforced evidence of the economy's gradual stabilization.
First-time applications for jobless benefits fell below a milestone level last week, heartening analysts even as they warned of the measure’s volatility. Meanwhile, the National Association of Realtors said pending home sales notched a 3.5 percent increase in November, and a key manufacturing gauge hit a 22-year high in December.
Initial claims for regular state unemployment insurance benefits fell 34,000 to a seasonally adjusted 388,000 in the week ended Dec. 25, hitting the lowest level since July of 2008, the Labor Department reported Thursday.
The level of claims helps observers to analyze the health of the labor market, and economists say claims would have to remain below 400,000 before there’s a substantial gain in hiring.
Economists polled by MarketWatch had expected initial claims of 413,000. The four-week average of new claims, which is smoother than the weekly data, fell 12,500 to 414,000, also reaching the lowest level since July of 2008.
Analysts also note that claims are difficult to seasonally adjust near the holidays. Without seasonal adjustment, the initial claims level rose about 25,000.
“Initial claims can be very volatile around year-end due to seasonal adjustment difficulties related to the holidays and we are cautious about reading too much into any one report,” wrote analysts at RDQ Economics in a research note.
However, RDQ added, claims have been trending lower. “Thus, these data indicate that the labor market continued to improve and suggest that job creation picked up in December,” according to RDQ.
Next week the government will report on nonfarm payrolls for December, and economists polled by MarketWatch are looking for an increase of 150,000 – up from the prior month’s weak gain of 39,000, but too small to take a large chunk out of the unemployment rate. Wall Street expects the unemployment rate to remain at 9.8 percent.
For now, housing’s recovery is slow at best. The National Association of Realtors said its pending-home-sales index rose to 92.2, a 3.5 percent rise from a downwardly revised 89.1 in October. The index is still 5 percent below November 2009 levels.
The data reflect contracts and not closings, which normally occur after a lag time of one to two months. The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales.