WRAPUP 5-US recovery hopes supported by jobless claims fall

* Initial claims for jobless benefits fall by 17,000

* Four-week moving average hits fresh two-year low

* Wholesale inventories rise 1.9 pct in October
(Adds comments from Dell CEO on hiring)

By Lucia Mutikani

WASHINGTON, Dec 9 (BestGrowthStock) – New U.S. economic data on
Thursday offered more signs the recovery was gaining traction,
with claims for jobless benefits falling and wholesalers
stocking up in anticipation of strong holiday demand.

Initial claims for state unemployment benefits dropped
17,000 to a seasonally adjusted 421,000, the Labor Department
said on Thursday, easing doubts about the jobs market after a
surprisingly weak report on November employment last Friday.

“It’s another report that suggests the monthly employment
numbers that we got last week probably understated the position
in jobs, and it’s another number that suggests we’re going to
get some upside surprises in economic activity,” said Michael
Strauss, chief economist of Commonfund, in Connecticut.

The government said last Friday employers added a mere
39,000 jobs last month, while the jobless rate spiked to 9.8
percent from 9.6 percent.

“Assuming we get the passage of a (tax) plan in Washington,
we’re probably looking at a situation where it wouldn’t
surprise me if we got either first or second quarter of next
year GDP growth near 4.0 percent,” Strauss said.

The U.S. Congress is debating a tax plan that would extend
personal income, dividend and capital gains tax cuts and renew
unemployment benefits for a further period. For details, see
[ID:nN09244537]

The plan is expected to boost economic growth next year by
anywhere from half to a full percentage point and cut the
stubbornly high unemployment rate by between a quarter to a
half a percentage point.

A separate report from the Commerce Department on Thursday
showed wholesale inventories rose 1.9 percent in October even
as sales increased at the fastest rate in seven months,
suggesting businesses were growing optimistic about a healthy
holiday shopping season. [ID:nN09201495]

The economic outlook was also brightened by a third report
from the Federal Reserve showing household wealth rebounded
$1.2 trillion in the third quarter after falling $1.4 trillion
in the prior period. [ID:nN09248530]

On Wall Street, the Standard & Poor’s 500 stock index was
modestly up around two-year highs in afternoon trade, but gains
were limited by this week’s rise in U.S. Treasury debt yields
and a firmer dollar against the euro.

Despite the high U.S. unemployment rate, companies that are
hiring say they are struggling to find qualified workers.

“The people and skills we’re looking for, they’re not
there. And so the educational institutions need to do a better
job creating these new skills,” Michael Dell, chief executive
of computer maker Dell Inc (DELL.O: ), told Reuters in an
interview. [ID:nN09288163]

“I just find it fascinating that you have this high
unemployment, yet we’re hiring and we’re not finding them,” he
added.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For graphics, click on:

U.S. weekly jobless claims: http://r.reuters.com/xyc49q

Jobless benefits breakdown:http://r.reuters.com/zeg49q

2011 CFO outlook survey of U.S. companies:

http://r.reuters.com/zej49q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

BLURRED PICTURE

The surprisingly small gain in employment last month had
blurred the labor market picture, but the bigger-than-expected
drop in weekly new claims for unemployment benefits
strengthened perceptions a durable recovery was under way.

In a sign that a gradual labor market healing was firmly
entrenched, the four-week average of new jobless claims, viewed
as a better measure of underlying trends, fell 4,000 to
427,500, the lowest level since early August 2008.

Both initial claims and the four-week average have now held
below 450,000 for five straight weeks. The 450,000 mark is
generally considered by economists as dividing line between a
market where jobs are growing and where they are being lost.

“The change coincides with a modest improvement in small
firms’ sentiment and the end of the contraction in bank lending
to commercial and industrial companies,” said Ian Shepherdson,
chief U.S. economist at High Frequency Economics in Valhalla,
New York.

“This is not an accident, in our view. Small firms, which
employ half the work force, have been hamstrung by tight
credit. If claims continue to drift down it would be reasonable
to expect better payroll numbers very soon.”

A Bank of America-Merrill Lynch survey of chief financial
officers released on Thursday showed nearly half of the 801
executives who participated expected their companies to hire
employees next year, up from 28 percent who expected to hire in
2010. [ID:nN09199985]

Another encouraging sign in the claims data was that the
number of people still receiving benefits under regular state
programs after an initial week of aid fell in the week ended
Nov. 27 to the lowest level since mid-November 2008.

The number of people on emergency unemployment benefits in
the week ended Nov. 20, the latest week for which data is
available, also fell sharply. A total of 8.30 million people
were claiming unemployment benefits during the Nov. 20 period
under all programs, down 611,994 from the prior week.

“Layoffs are diminishing. The fact that the number of
people receiving benefits is declining shows people are getting
jobs,” said David Wyss, chief economist at Standard & Poor’s in
New York.

WRAPUP 5-US recovery hopes supported by jobless claims fall