"Businesses are sitting tight"
- Ryan Sweet, a senior economist at Moody's Analytics Inc.
The number of Americans who lost their jobs dropped during the last week, while the trend reading hit a near five-year low, a sign of healing in the labour market. The Labor Department said Thursday that the number of initial claims for state unemployment benefits dropped by 5,000 to a seasonally adjusted 366,000 in the week ended February 5. The less volatile four-week moving average for new claims, a gauge of the trend in layoffs, dropped 2,250 to 350,500, reaching the lowest level since March 2008. However, the number of people still receiving benefits under regular state programmes after an initial week of aid surged 8,000 to 3.22 million in the week ended January 26.
Also Thursday, Chicago Fed President Charles Evans said that the outlook for the economy is positive, even though the unemployment rate probably will not get to 6.5% until the middle of 2015. This level is targeted by the Fed, once it is reached, the central bank will wind down its low interest rate policy. Currently, the overall jobless rate stands at 7.9%.
"Businesses are sitting tight," said Ryan Sweet, a senior economist at Moody's Analytics Inc. in West Chester, Pennsylvania. "They're not hiring aggressively nor are they firing."
© Dukascopy Bank SA