WASHINGTON - Far fewer people are applying for unemployment benefits as the year ends, raising hopes for a healthier job market in 2011.
Applications are at their lowest level since July 2008, the Labor Department says. They fell to 388,000 in the week ending Dec. 25, bringing the four-week average to 414,000. Until mid-October, the four-week average had been stuck above 450,000 most of the year.
Economists say the number of people applying for unemployment benefits predicts where the job market will go over the next few months - so much so that they use this data to help forecast economic growth.
"We're starting to see a pickup in job growth," said Conference Board economist Kenneth Goldstein. "We may even get to a point, conceivably by spring, where the consumer is going to say that it no longer feels like we're still in a recession."
Goldstein expects the economy to generate 100,000 to 150,000 jobs a month by spring, up from an average 86,500 a month in 2010. That's an improvement, but still not enough to cause a big drop in the unemployment rate. To Paul Kasriel, chief economist at Northern Trust, fewer people applying for unemployment benefits suggests the unemployment rate will slip from 9.8 percent in November to 9.7 percent early next year; that would mean about 150,000 fewer unemployed.
The Conference Board's Goldstein said the unemployment rate might actually rise for a few months as an increase in job openings lures even more job seekers back into the labor market. He doesn't expect the unemployment rate to start dropping until mid-2011 and says it will finish the year above 9 percent. - AP