Jobless claims in U.S. plunged more than forecast last week

Extended Benefits

Those who’ve used up their traditional benefits and are now collecting emergency and extended payments increased by about 37,800 to 1.84 million in the week ended March 23.

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 2.4% in the week ended March 30, today’s report showed.

Twenty-one states and territories reported an increase in claims, while 32 reported a decrease. 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.

Declining dismissals, combined with a sustained pickup in hiring, are needed help spur consumer spending, which accounts for about 70% of the economy.

Payrolls grew in March by 88,000, the smallest gain in nine months, after a revised 268,000 February increase, the Labor Department reported on April 5. The unemployment rate fell to 7.6%, the lowest in four years, from 7.7%.

Fed’s View

Federal Reserve Chairman Ben S. Bernanke and his colleagues reiterated March 20 they will press on with monetary easing until the labor market outlook improves “substantially.”

Minutes of the March meeting, released yesterday, showed members of the policy making committee “thought that if the outlook for labor market conditions improved as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end.”

The economy expanded at a 3% annualized rate in the first three months of 2013 and will slow to a 1.5% pace in the second quarter, according to the median forecast of economists surveyed by Bloomberg from April 5 to April 9.

Cooling growth will in part reflect the $85 billion in across-the-board government budget cuts that started last month. The reductions in planned spending, which began because Congress couldn’t compromise on a debt-reduction strategy, trim 5% from domestic agencies and 8% for the Defense Department this fiscal year.

Some employers are still paring staff. Even after the banking industry posted its best results since 2006, the six largest U.S. banks announced plans in the first three months of this year to eliminate about 21,000 positions, or 1.8% of their combined workforce, according to data compiled by Bloomberg. That’s the most since 2011’s third quarter. JPMorgan Chase & Co. topped the list with 17,000 reductions scheduled by the end of 2014.

Bloomberg News

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