Construction Industry Forecasts

U.S. initial jobless claims for the week ending November 20 dropped to only 407,000, according to the U.S. Department of Labor (Employment and Training Administration Division). This marked a decline of 34,000 versus the week before.

The latest figure is the lowest in more than two years dating back to July 2008. It is very good news. It means the improvement in U.S. labor markets has taken firmer hold. The November jobs report should be at least as strong as October’s 151,000 gain.

The unemployment insurance data is usually released first thing Thursday morning. The Wednesday release date has been necessitated by the American Thanksgiving Day holiday.

The benchmark for initial jobless claims is 500,000. Above that level, more workers are being let go from their jobs than are being newly hired. The figure was above half a million throughout the recession and right up until the end of last year.

Prior to the latest report, the number has bounced around between 450,000 and 500,000 through most of this year. This has seriously limited the scope of the labor market improvement. It has also been a main cause of the worry about a possible double dip recession.

Initial jobless claims of 407,000 is a giant step in a healthier direction.

After-tax profits by U.S. corporations in the third quarter of this year were 28% higher than in the same quarter a year ago.

Recovery in the corporate sector clearly began with productivity enhancements that did not require the hiring of workers.

However, as activity levels continue to increase, the need to take on staff becomes more urgent. The strong profit picture means firms are financially able to make the necessary hiring commitments.

The consumer spending side of the economy benefits in two ways from the most recent developments. Incomes rise with better employment levels. Also, stock market holdings in mutual and pension funds improve along with corporate profit growth.

A more optimistic consumer is important to the economy since consumer spending accounts for 70% of U.S. gross domestic product (GDP).

Regionally, the most significant declines in initial jobless claims week to week occurred in California (-5,044), Pennsylvania (-4,494), North Carolina (-2,685), Texas (-2,632) and Wisconsin (-2,416).

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News. Mr. Carrick also has a lifestyle blog that can be reached by clicking here.