New data released by the Labor Department shows that as of the end of January fewer Americans were filing new jobless benefit claims. This is a new five year low and possibly a sign that the sluggish recovery in the labor market is still on track.
Other data from the Labor Department showed a decisive drop in productivity for the 2012 fourth quarter that was due to a weakened economic output. Also, initial claims for unemployment benefits dropped by about 5,000 for a seasonally adjusted 366,000.
Another indication that people are having a hard time finding work is that the most recent reports showed quite a large number still receiving benefits from state programs after the initial week increased by 8,000 to over 3.2 million at the end of January of this year. While claims were volatile in January due to holidays and the way dates fell, Department analysts are seeing some of that volatility receding. Market analysts believe that this shows the job market in the United States is on a slow pace to recovery.
Although this level as higher than expected by labor and economy analysts although they say the downward trending number of layoffs may be a sign that economy is strong enough for employers to increase their number of employees. Economists say the labor market does show signs of slight improvement but is by no means as robust as it could be. While employers have cut back on layoffs, they have been slow to add jobs.
In a separate labor report fourth quarter nonfarm productivity fell the most it has in nearly two years. This is in spite of marginal steady gains in employment. Overall productivity took one of the sharpest first quarter drops since 2011. However, a rebound is expected because experts believe the weak output during the fourth quarter for 2012 was partially the result of such temporary factors as a heavy decline in government military spending. Data as recent as the first of February showed an expected return growth in gross domestic product this year.
Unit labor costs, worker compensations, employer contributions to social insurance and private benefit healthcare plans certainly play a huge role in how things will progress as well. Hourly compensation rose on average nearly 2.5 percent during the last quarter of 2012. Although higher wages have in the past fueled inflation, many economists believe the still slack economy may curtail pricing pressure. As usual with the current state of things, it is wait and see situation.