Applications for U.S. unemployment benefits fell to a six-week low, a sign the labor market is improving after a setback last month.
First-time jobless claims decreased a larger-than-forecast 16,000 in the week ended April 20 to 339,000, the lowest since March 9, Labor Department data showed in Washington. Also today, Bloomberg’s Consumer Comfort Index held close to the highest level in five years.
Fewer dismissals show companies have enough confidence in demand and are in a position to add to headcount should sales strengthen after a pause in March. Americans last week grew more confident that their financial situations were improving, indicating rising home values and higher stock prices will help sustain spending and keep the economy expanding.
“We have a labor market recovery that’s ongoing,” said Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut, who projected 340,000 filings and is the third-best claims forecaster in the past two years, according to data compiled by Bloomberg. “The labor market has its ups and downs, but the direction shows things are getting better. Companies are willing to increase their headcounts but at a very slow pace.”
Stocks rose after the figures and as companies from Cliffs Natural Resources Inc. to United Parcel Service Inc. reported earnings that topped estimates. The Standard & Poor’s 500 Index advanced 0.6 percent to 1,588.55 at 12:03 p.m. in New York.
The Bloomberg index of consumer comfort eased to minus 29.9 in the week ended April 21 from minus 29.2 the prior period, which was the highest since January 2008, today’s report showed. The latest week’s drop was within the margin of error of 3 percentage points. Households were the most optimistic about their finances in 10 months.
“Americans are feeling more secure about their own financial situation,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Household wealth is recovering. The decline in gasoline prices is providing some relief to households across the income spectrum.”
Today’s U.S. data followed signs from overseas that the world economy is stabilizing. The German government lifted its growth forecast for Europe’s biggest economy this year, citing what it sees as employers’ willingness to step up hiring.
Germany’s gross domestic product will expand 0.5 percent in 2013, up from a prior prediction of 0.4 percent made in January, Economy Minister Philipp Roesler said today in a posting on Twitter. The ministry left its growth forecast for 2014 at 1.6 percent.
In South Korea, the economy expanded in the first quarter by the most in two years. GDP rose 0.9 percent from the previous three months after a 0.3 percent increase in the fourth quarter, the Bank of Korea said.
The economy in the U.S. improved in the first quarter, an initial estimate from the Commerce Department is projected to show tomorrow. GDP climbed at a 3 percent annual rate after a 0.4 percent advance in the final three months of 2012, according to the median forecast in a Bloomberg survey.
Economists projected 350,000 claims last week, according to the median estimate in a Bloomberg survey. Estimates of the 49 economists ranged from 340,000 to 370,000 after an initially reported 352,000.
The four-week moving average of claims fell to 357,500 last week, the lowest since March, from 362,000.
While a Labor Department spokesman said there was nothing unusual that affected today’s figures, he said big swings in claims are common in April because dismissals related to school vacations and holidays such as Easter don’t always occur during the same week each year. The period of volatility in unadjusted data should be coming to an end, he said.
The number of people continuing to collect jobless benefits fell by 93,000 to 3 million in the week ended April 13, the lowest since May 2008.
Contributing to the pool of the recently unemployed, Jones Group Inc., the owner of the Jones New York, Nine West and Anne Klein fashion brands, said yesterday it will close 170 stores and trim 8 percent of its workforce after its first-quarter profit trailed analysts’ estimates. About 850 jobs are being cut, according to a Jones Group spokeswoman.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates. Employers added a net 88,000, workers to payrolls in March, the fewest in nine months. Unemployment fell to 7.6 percent, the lowest in four years.
The limited pace of job growth signals the Federal Reserve will stick with its plan for record monetary stimulus when policy makers meet next week.
“While I don’t want to read too much into a single month’s data, this underscores the need to wait and see how the economy develops before declaring victory prematurely,” Federal Reserve Bank of New York President William C. Dudley said on April 16. “We have seen only a moderate improvement in labor market conditions over the past six months or so.”
Next week, the Labor Department will release April’s report on the U.S. employment situation. Economists in a Bloomberg survey forecast payrolls expanded by 155,000. In the six months ended in March, employment averaged 188,000.