Did the Fiscal Cliff Push Up Unemployment Claims?
Initial claims for state unemployment benefits rose more than expected last week, but unemployment statistics usually vacillate during this time of year because holiday closures distort the data, preventing a clear analysis of labor market conditions.
As the Labor Department reported on Monday, the number of Americans filing new benefit claims increased 10,000 to a seasonally adjusted 372,000 in the week ended December 29. In comparison, a survey of economists conducted by Bloomberg had predicted 360,000 claims. While unemployment claims missed estimates, a report from the ADP Research Institute stated that companies added a better-than-expected 215,000 workers in December.
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The four-week moving average for new claims, which is a more accurate measure of labor market trends, increased by 250 to 360,000 last week.
In the first 11 months of the year, job gains averaged approximately 151,000 per month, a figure too low to significantly lower unemployment, according to Reuters. Although Congress approved a deal this week to avoid the combination of government spending cuts and higher taxes, the budget problems are far from resolved and uncertainty may continue. Ahead of the fiscal cliff, employers hesitated to increase hiring, and continuing uncertainty may further hurt job growth.
But according to data released by the global outplacement consultancy Challenger, Gray & Christmas, nationwide job cuts dropped last month by 43 percent to the second-lowest total of 2012. December’s 32,556 cuts brought the year’s final count to 523,362, the lowest year-end total since 1997.
“We saw a few spikes in monthly job cuts in 2012 and there were some significant mass layoffs that definitely reminded us that not every industry is enjoying the fruits of recovery. However, the overall pace of downsizing was at its slowest since the end of the recession. In fact, we have not seen this level of job cutting since before the dot.com collapse and subsequent 2001 recession,” said Chief Executive Officer John A. Challenger.
One of the biggest layoffs in December occurred when Citigroup (NYSE:C) announced 11,000 cuts early in the month, and as a result, the financial sector was the top job-cutting sector. However, the construction, retail, and aerospace and defense industries saw decreased job-cutting activity.