WASHINGTON – Applications for U.S. jobless benefits remained below 300,000 for the 12th straight week, signaling the labor market remains firm even as the economy has been slow to rebound from a first-quarter slump.
Jobless claims increased by 7,000 to 282,000 in the week ended May 23, a Labor Department report showed Thursday in Washington. The median forecast of 51 economists surveyed by Bloomberg called for 270,000. Readings this low typically coincide with healthy levels of hiring.
Persistently low firings signal managers are planning for at least steady business demand. As joblessness approaches the Federal Reserve’s definition of full employment, employers might be pressured to boost paychecks in order to retain and attract workers.
“We’re in a Goldilocks period here” of steady staffing levels, Stan Shipley, an economist at Evercore ISI in New York, said before the report. “You’re not letting them go, and ultimately you’re going to have to start boosting wages to protect the employees you want to keep and to steal people from the guy across the street.”
While the relationship between claims and hiring isn’t always constant, this low level of applications is usually consistent with employment gains of about 250,000 a month, Shipley said.
Estimates in the Bloomberg survey for jobless claims ranged from 265,000 to 285,000. The Labor Department revised the prior week’s reading to 275,000 from an initially reported 274,000.
Nothing unusual
No states were estimated last week and there was nothing unusual in the data, a Labor Department spokesman said as the report was released to the press.
The four-week average of claims, a less-volatile measure than the weekly figure, climbed to 271,500 from a 15-year low of 266,500 the prior week.
The number of people continuing to receive jobless benefits increased by 11,000 to 2.22 million in the week ended May 16. The unemployment rate among people eligible for benefits rose to 1.7 percent from 1.6 percent. These data are reported with a one-week lag.
Job gains have been slow to rebound after a weaker start to the year, rising by 223,000 in April after 85,000 the prior month that was the lowest since June 2012.
Payroll increases have averaged 193,750 a month in 2015 after a 259,670 average last year that was the best since 1999.
Brighter outlook
A steadily improving labor market is among things construction equipment maker Deere & Co. sees contributing to a brighter economic outlook.
“The economy continues to move forward,” Susan Karlix, manager of investor communications at the Moline, Ill.-based company, said on a May 22 earnings call. “GDP growth is improving, unemployment is falling, construction hiring is on the increase, and housing starts are expected to exceed 1 million units this year.”
The world’s largest economy is crawling out of a first- quarter slump, when it barely expanded amid a stronger dollar, severe weather and a labor dispute at West Coast ports. Gross domestic product increased at a 0.2 percent pace in the first three months of the year, Commerce Department data show.
The government’s revised estimate probably will indicate growth contracted at a 0.8 percent rate, according to the median estimate in a Bloomberg survey ahead of Friday’s release.
Surprisingly downbeat
Jobless claims have been a rare, reliably positive indicator as the economy struggles to gain traction in the second quarter. Economic data are showing more signs of momentum after a string of disappointing figures pushed the Bloomberg Economic Surprise Index this month to its lowest level of the expansion earlier.
Americans are registering more optimism, signaling households might be a stronger support to underlying growth later this year. The Conference Board’s consumer confidence gauge advanced to 95.4 in May from a revised April reading of 94.3, the New York-based private research group said Tuesday.
While the sentiment measure has moderated from 103.8 at the start of the year that was the highest since August 2007, it’s still above the 86.9 average in 2014.
Fed Chair Janet Yellen sees the labor market contributing to a more upbeat consumer.
“The U.S. economy seems well-positioned for continued growth,” Yellen said in a May 22 speech in Providence, R.I. “Households are seeing the benefits of the improving jobs situation, and consumer confidence has been solid.”
