Shobhana Chandra Washington
More Americans than projected filed applications for unemployment benefits last week, but the four-week average dropped, indicating gradual job market progress consistent with the Federal Reserve’s outlook.
Jobless claims increased by 28 000 to 326 000 in the week to May 17, after 298 000 filings a week earlier that were higher than initially reported, Labor Department figures showed yesterday in Washington. The median forecast of 50 economists called for a rise to 310 000.
Continuing claims fell to the lowest since December 2007.
A steady decline in firings is needed for employers to boost hiring and raise wages that would spur consumer spending, which accounts for about 70 percent of the economy. Fed policymakers expect the employment figures will show “further gradual improvement”, according to minutes of last month’s meeting released on Wednesday.
“This level of claims is enough to keep bringing down the unemployment rate,” Jim O’Sullivan, the chief US economist at High Frequency Economics, said before the report. He is the second-best forecaster of claims in the past two years.
“The overall message is, the trend shows a decline.”
Economists’ estimates ranged from claims of 299 000 to 325 000. The Labour Department revised the previous week’s figure from an initially reported 297 000.
Stock index futures stayed higher after the report. The contract on the Standard & Poor’s 500 index maturing in June rose 0.1 percent to 1 866 at 8:34am in New York.
The four-week moving average for jobless claims, a less volatile measure than the weekly figures, fell to 322 500 last week from 323 500.
Last week included the 12th of the month, which coincides with the period when the department surveys employers to calculate monthly payroll data. The four-week average was 312 000 during the comparable April survey week.
The number of people continuing to receive jobless benefits dropped by 13 000 to 2.65 million in the week to May 10.
The unemployment rate among people eligible for benefits held at 2 percent, the report showed. This data is reported with a one-week lag.
Initial jobless claims reflect firings and typically wane before job growth can accelerate.
US payrolls expanded last month by 288 000 workers, the biggest gain since 2012, after a 203 000 gain in March, the department said on May 2. The jobless rate fell to 6.3 percent, the lowest since September 2008.
The progress in employment, with rising real estate values, is contributing to rising household purchases at stores such as home-improvement retailer Lowe’s, which posted first-quarter profit that topped analysts’ estimates.
“Consumers continue to have an increased willingness to invest in their homes” because home prices kept rising, Lowe’s chief executive Robert Niblock said .
Honeywell International, a manufacturer of industrial parts, is among firms staying cautious about adding workers in developed markets such as the US. Honeywell was “still hiring” in developed countries, but not at a rate that exceeded attrition chief executive Dave Cote said on Monday.
At their April 29-30 meeting Fed policymakers said: “Conditions in the labour market continued to improve over the intermeeting period and participants expected further gradual improvement.” – Bloomberg