Ahead Of The Bell: US Unemployment Benefits

WASHINGTON (AP) â¿¿ Applications for U.S. unemployment aid likely rose last week, though they remained at a level consistent with modest job gains.

Economists forecast that applications increased 20,000 to a seasonally adjusted 355,000, according to a survey by FactSet. The Labor Department will release the report at 8:30 a.m. EST Thursday.

The department said last week that applications fell to their lowest level in five years. But much of that decline reflected the government's difficulty adjusting its numbers to account for layoffs after the holiday shopping season.

Overall, applications remain at a level that suggests employers are hiring at a slow but steady pace. Applications fluctuated between 360,000 and 390,000 for most of last year. At the same time, employers added an average of 153,000 jobs a month.

That's just been enough to slowly push down the unemployment rate, which fell 0.7 percentage points last year to 7.8 percent.

Employers added 155,000 jobs last month, nearly matching the average for the year.

The overall economy grew at an annual rate of 3.1 percent in the July-September quarter. But economists believe activity slowed considerably in the October-December quarter to a rate below 2 percent or less, in part because companies cut back on restocking.

Less restocking leads to slower factory production, which weighs on economic growth.

But there are signs the economy is improving. The once-battered housing sector is recovering, which is boosting construction and home prices. Home builders started work in 2012 on the most new homes in four years. And sales of previously occupied homes reached their highest level in five years last year. Still, home building and sales remain below the levels consistent with a healthy economy.

More home building will likely increase job growth. In December, the economy gained 30,000 construction jobs â¿¿ the most in 15 months. And economists expect construction firms to add more jobs this year as the housing recovery strengthens.

Patrick Newport, an economist at IHS Global Insight, forecasts that construction companies will add 140,000 jobs this year, up from a meager 18,000 in 2012.

Growing demand has also pushed up home prices, which rose 7.4 percent in November compared with the same month a year earlier. Rising home values makes homeowners feel wealthier and encourages more spending, which boosts growth and can lead to more hiring.

And factory production rose in December for a second straight month, buoyed by more output of autos, electronics and business investment.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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