The number of Americans filing claims for jobless benefits unexpectedly dropped last week to the lowest level in more than five years, a signal employers are confident enough in the economic outlook to hold onto workers.
Applications for unemployment insurance payments decreased by 4,000 to 323,000 in the week ended May 4, the least since January 2008, Labor Department figures showed today. Economists forecast 335,000 claims, according to the median estimate in a Bloomberg survey. For the first time, the average over the past month was the lowest since before the last recession began.
Dismissals have dropped in 2013 as employers rely on existing staff to meet demand. Further advances in the labor market hinge on whether hiring will pick up, helping put some of the 11.7 million unemployed Americans back to work and giving consumer spending a lift.
“There is only so much companies can cut layoffs before they have to start thinking about adding to headcounts,” said Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut, who projected claims would drop to 325,000, the lowest forecast in the Bloomberg survey. “The longer this continues, the more likely companies will have to add to headcounts.”
Stock-index futures held earlier losses after the report. The contract on the Standard & Poor’s 500 Index maturing in June fell 0.2% to 1,624.9 at 8:47 a.m. in New York after benchmark equity gauges climbed to successive record levels.
Estimates for first-time claims ranged from 325,000 to 365,000 in the Bloomberg survey of 48 economists. The prior week’s applications were revised up to 327,000 from the initially reported 324,000.
A Labor Department official today said there was nothing unusual that affected today’s figures.
The four-week moving average of claims, a less-volatile measure, dropped to 336,750, the lowest level since November 2007. The worst recession since the Great Depression began the following month and ended in June 2009.
The number of people continuing to collect jobless benefits fell by 27,000 to 3.01 million in the week ended April 27. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 14,500 to 1.76 million in the week ended April 20.
The unemployment rate among people eligible for benefits held at 2.3% in the week ended April 27. Forty-three states and territories reported a decrease in claims, while 10 reported an increase.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Payrolls expanded by 165,000 workers last month following a 138,000 gain in March, the Labor Department reported on May 3. Revisions added a total of 114,000 jobs to the tally in February and March. The unemployment rate unexpectedly fell to a four- year low of 7.5%.
What happens next depends on how employers navigate the weaker sales anticipated for the current quarter. A Labor Department report released earlier this week showed job openings eased in March from the highest level in almost five years.
Fuji Heavy Industries Ltd., the maker of Subaru cars, has signaled it believes the U.S. economy is strong enough to merit expanding business. The Tokyo-based carmaker said yesterday it will invest $400 million to boost U.S. capacity by the end of 2016 as demand for vehicles rises, and it will hire 900 people for its plant Lafayette, Indiana.