2014 Government Regulations & Business Summit
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By Lorraine Woellert and Shobhana Chandra
WASHINGTON - Fewer Americans than forecast filed applications for unemployment benefits last week, easing concern the labor market may weaken in the second half.
Jobless claims decreased by 12,000 to 365,000 in the week ended Sept. 1, the fewest in a month, the Labor Department reported today in Washington. The median estimate of 48 economists surveyed by Bloomberg called for a drop to 370,000.
Employers are limiting firings as demand warrants holding on to current workers, helping support consumer spending, the biggest part of the economy. At the same time, weak hiring and unemployment exceeding 8 percent pose a “grave concern,” Federal Reserve Chairman Ben S. Bernanke said last week as he made a case for further monetary easing.
“Clearly, the direction of claims is encouraging,” said Millan Mulraine, a senior U.S. strategist at TD Securities in New York. The improvement “doesn’t seem to be substantial, but we are moving in the right direction.”
Companies added more workers than forecast in August, another report today showed. Employment increased by 201,000, the biggest gain in five months, according to figures from Roseland, N.J.-based ADP Employer Services. The median forecast of 41 economists surveyed by Bloomberg called for an advance of 140,000.
Stock-index futures held earlier gains after the claims report. The contract on the Standard & Poor’s 500 Index maturing this month climbed 0.6 percent to 1,411.9 at 8:45 a.m. in New York.
Estimates ranged from 363,000 to 380,000. The Labor Department revised the previous week’s figure up to 377,000, from an initially reported 374,000.
A Labor Department spokesman said there was nothing unusual in the data last week, and that there was no indication Hurricane Isaac had any effect on filings. The level of claims in Louisiana has been fairly stable, he said, and only one state - Colorado - was estimated last week.
The economy added 127,000 jobs in August after a gain of 163,000 in July, Labor Department figures due tomorrow may show according to the median forecast of economists surveyed by Bloomberg. The jobless rate remained at 8.3 percent for a second month, the survey also showed.
The four-week moving average for jobless claims, a less- volatile measure than the weekly figures, rose to 371,250 last week from 371,000, today’s report showed.
The number of people continuing to receive jobless benefits fell by 6,000 in the week ended Aug. 25 to 3.32 million.
The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 11,800 to 2.27 million in the week ended Aug. 18.
The unemployment rate among people eligible for benefits held at 2.6 percent, today’s report showed.
Twenty-five states and territories reported a decline in claims, while 27 reported an increase. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Bernanke, in an Aug. 31 speech in Jackson Hole, Wyoming, said the Fed will provide additional policy stimulus as needed to promote a stronger economic recovery.
“The stagnation of the labor market in particular is a grave concern,” he said. Persistently high unemployment “will wreak structural damage on our economy that could last for many years.”
Companies including Lexmark International Inc., Revlon Inc., Goldman Sachs Group Inc., St. Jude Medical Inc. and Google Inc. have announced plans to cut staff.
Others are benefiting from improving demand. Freight carrier Norfolk Southern Corp. in Norfolk, Va., has been helped by a surge in pickup truck sales.
“We look at the economy as fairly stable at this point in time,” said Dave Denton, chief executive officer of Woonsocket-based CVS Caremark Corp., the largest provider of prescription drugs in the U.S.
“I keep saying it’s going sideways,” Denton said at a Sept. 5 conference. “I don’t see signs the economic climate is going to change substantially in one way or the other.”