The number of Americans who filed for unemployment benefits declined to a six-week low, showing further improvement in the labor market.
First-time jobless claims unexpectedly fell by 7,000 to 340,000 in the week ended March 2, the lowest since the period ended Jan. 19, according to data today from the Labor Department in Washington. The median forecast of 50 economists surveyed by Bloomberg called for an increase to 355,000. The four-week average dropped to a five-year low.
Companies are easing up on dismissals as purchases of equipment climb and households maintain spending in the face of higher payroll taxes. Further declines in firings are a first step toward bigger employment and wage gains, and a report tomorrow may show payrolls picked up in February.
“Every indication we have is that the labor market is beginning to pick up steam,” said Drew Matus, deputy U.S. chief economist at UBS Securities LLC in Stamford, Connecticut, who correctly projected the drop in claims. “It’s all consistent with 2013 being an okay year despite all the fears about what sequestration might mean or Europe might do.”
Stock-index futures held gains after the figures, with the contract on the Standard & Poor’s 500 Index expiring this month rising 0.3% to 1,543.7 at 8:46 a.m. in New York.
Another report showed the U.S. trade deficit widened more than forecast in January as demand for imported crude oil rebounded. The gap grew by 16.5% to $44.4 billion from $38.1 billion in December that was the smallest in three years, Commerce Department figures showed in Washington. The median forecast in a Bloomberg survey called for the deficit to increase to $42.6 billion.
Economists’ estimates in the Bloomberg survey ranged from 332,000 to 362,000 claims after an initially reported 344,000 in the prior period.
No states estimated the number of claims last week and there was nothing unusual in the weekly data, a Labor Department official said as the figures were released.
The less-volatile four-week moving average fell by 7,000 to 348,750, the lowest since March 8, 2008.
The number of people continuing to receive jobless benefits rose by 3,000 to 3.09 million in the week ended Feb. 23. The continuing claims figure doesn’t include Americans receiving extended unemployment benefits under federal programs.
Those people collecting emergency and extended payments decreased by about 225,400 to 1.78 million in the week ended Feb. 16.
The unemployment rate among Americans eligible for benefits held at 2.4% in the week ended Feb. 23, today’s report showed.
Thirty-seven states and territories reported a decrease in claims, while 16 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.
Defense contractors will be hit hardest by the across-the- board cutbacks in the growth of government spending. Rockwell Collins Inc., Boeing Co. and Huntington Ingalls Industries Inc. are among companies that have said they could announce headcount reductions.
Because the reductions extend over the next decade, “it’s still more of a question mark than it is a conclusion,” Ed Coleman, chairman and chief executive officer at Unisys Corp., a technology services company based in Blue Bell, Pennsylvania, said at a March 4 conference. “It has, more broadly, the impact of slowing down decision-making processes in the federal government, which have not been particularly fast-paced for a while.”
“It does just add more uncertainty into that marketplace,” he said.