Jobless Claims in U.S. Decreased 11,000 Last Week to 445,000

By Timothy R. Homan – Oct 7, 2010 8:49 AM ET

Applications for U.S. unemployment benefits unexpectedly fell last week to the lowest level in three months, indicating companies are slowing the pace of firings.

Jobless claims dropped by 11,000 to 445,000 in the week ended Oct. 2, the fewest since July 10, Labor Department figures showed today in Washington. Economists projected 455,000 new claims last week, according to the median forecast in a Bloomberg News survey. The total number of people receiving unemployment insurance decreased and those getting extended payments jumped.

While dismissals are abating, employers aren’t adding the number of jobs needed to reduceunemployment that’s close to a 26-year high. A report tomorrow is forecast to show the jobless rate rose for a second month in September, indicating a struggling labor market that may compel the Federal Reserve to ease monetary policy.

There is “sluggish improvement,” said Maxwell Clarke, chief U.S. economist at IDEAglobal in New York, who accurately forecast the decline in jobless claims. “Conditions remain for employment to continue to improve.”

Stock-index futures climbed after the report and Treasury securities were little changed. The contract on the Standard & Poor’s 500 Index rose 0.3 percent to 1,159.5 at 8:48 a.m. in New York. The yield on the benchmark 10-year note, which moves inversely to prices, fell to 2.39 percent from 2.40 percent late yesterday.

Lower than Projected

Estimates for jobless claims in the Bloomberg survey of 47 economists ranged from 440,000 to 470,000. The Labor Department revised the prior week’s figure to 456,000 from 453,000.

The four-week moving average, a less volatile measure than the weekly figures, dropped to 455,750 last week from 458,750, today’s report showed.

The number of people continuing to receive jobless benefits dropped by 48,000 in the week ended Sept. 25 to 4.46 million, the lowest since June 26.

The continuing claims figure does not include the number of Americans receiving extended and emergency benefits under federal programs. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments increased by about 257,000 to 5.14 million in the week ended Sept. 18.

Eligible Jobless

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 3.5 percent in the week ended Sept. 25 from 3.6 percent the prior week.

Thirty-seven states and territories reported a decrease in claims, led by a 3,700 decline in New York, where there were fewer staffing reductions in construction and services. Sixteen states reported an increase in the week ended Sept. 25.

Initial jobless claims reflect weekly firings and tend to fall as job growth — measured by the monthly non-farm payrolls report — accelerates.

Private employers in September added 75,000 workers while total payrolls were unchanged, according to a Bloomberg survey before tomorrow’s Labor Department figures. The unemployment rate may have increased to 9.7 percent last month.

The economy is a top issue for voters in the November congressional elections, and polls show the public is increasingly skeptical of President Barack Obama’s performance.

While some companies are still firing employees, others are recalling workers.

American Airlines

American Airlines, the third largest U.S. airline, plans to recall 545 flight attendants and 250 pilots to meet demand for international flights as it begins it begins an alliance with British Airways Plc and Spain’s Iberia.

The first 25 pilots will return to work mid-November and about 30 furloughed pilots will be recalled monthly after that, American, a unit of Fort Worth, Texas-based AMR Corp., said yesterday in a statement. The first recall notices for flight attendants will be issued this month to about 225 workers.

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

Courtesy : Bloomberg.com

Davos 2010 – will india meet the global expectations?

The World Bank has projected (in its Global Development Finance Report) that the Indian economy will grow at 8% in 2010, which would make it the fastest-growing economy in the world for the first time, surpassing China, which is projected to grow at 7.7% rate.

For the current year, the Indian economy is projected to grow at 5.1%, revised up from an earlier projection of 4%. It may be added that India has consistently outperformed World Bank’s forecasts in the past.

The slow pace of reforms in critical areas had affected India’s growth in the past years. However, the re-elected Government has promised to bring about desired reforms in infrastructure, social sector and financial sector. Among other reforms in the pipeline are opening up of retail, insurance and banking sectors to more foreign investment and reducing Government ownership in refineries, banks and fertilizer companies.

Prospects for strong economic growth have resulted in the recent surge in prices of Indian ETFs such as PowerShares India (PIN). While ETFs are good vehicles for exposure to the country, investors may also look at specific sectors, which are poised for higher growth than others.

The Indian mobile industry has now moved out of its hyper-growth mode, but is expected to continue to grow at double-digit rates in coming years as operators focus on rural parts of the country. Mobile market penetration has been projected to increase from about 40% currently to about 65% in 2013. Companies like Vodafone (VOD) are expected to benefit.

India’s retail sector (the fifth largest in the world) is expected to grow at a 10% rate. Consumer demand has remained strong and is growing as the young population is booming. The next phase of retail expansion is expected to come from the rural areas.

The financial sector is currently on the rebound with improvement in the macroeconomic environment. However, deterioration in the asset quality still remains an issue, particularly for banks like ICICI Bank (IBN), which have had massive expansion in the last few years.

The Indian IT sector has been hurt by the global slowdown as most of its revenues have come from clients in US and UK. Outsourcing competitiveness is also declining as other low cost centers are emerging in Eastern Europe and Asia. Top IT companies like Infosys (INFY) and Wipro (WIT), which saw 20-25% revenue growth in the past, now project near flat growth. These companies will benefit once the global economy recovers.

There are some areas for concern, though. Due to its deteriorating fiscal position, the government is not in a position to offer a large stimulus package in the budget slated for release in July.

Further, although the government now has a healthy majority in parliament, strong political will is required (which has been lacking so far) to cut popular subsidies and modernize labor laws.

Courtesy: seekingalpha.com