Jobless claims unexpectedly fall as U.S. labor market gains

Extended Benefits

Those people collecting emergency and extended payments increased by about 136,500 to 1.92 million in the week ended Feb. 23.

The unemployment rate among Americans eligible for benefits held at 2.4% in the week ended March 2, today’s report showed.

Thirty-seven states and territories reported an increase in claims, while 16 reported a drop. 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.

Employment rose by 236,000 workers last month after a 119,000 gain in January, Labor Department figures showed last week. The median forecast of 90 economists surveyed by Bloomberg projected an advance of 165,000. The jobless rate dropped to 7.7%, the lowest since December 2008, from 7.9%.

Budget Cuts

Automatic across-the-board federal budget cuts that started taking effect on March 1 may cause some government agencies and companies to pull back in coming months. The reductions, known as sequestration, sum to about $85 billion in spending authority for the fiscal year that ends in September.

“The sequester is another issue,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “Beginning in April, we’ll start to get layoff notices, so we could see some upward bias on new filings because of the sequester, but lawmakers still have time to scale it back.”

“I think we’re setting up for some softening” because of sequestration effects, Sweet said.

Some managers may keep staff lean amid concern growth in the U.S. and globally will cool. Agilent Technologies Inc. of Santa Clara, California, a scientific-testing equipment company, is trimming costs.

“Fiscal year 2013 will be our second year of weak revenue growth and the second year of clamp-down on our expenses, and that includes hiring, very strict hiring controls,” Chief Financial Officer Didier Hirsch said at a March 7 analyst meeting. “Last month, we implemented even deeper cuts and we implemented those deeper cuts as a hedge because of the uncertainty about the world economy.”

Bloomberg News

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