Fewer Americans than projected filed applications for unemployment benefits last week, a sign that the job market is sustaining recent gains.
Jobless claims decreased by 23,000 to 340,000 in the week ended May 18, Labor Department figures showed today in Washington. The median forecast of 50 economists surveyed by Bloomberg called for a drop to 345,000. No states were estimated and there was nothing unusual in the data, a Labor Department spokesman said.
Falling dismissals could lay the groundwork for a hiring pickup should the economy be able to overcome the federal budget cuts that are projected to curb the expansion. Federal Reserve Chairman Ben S. Bernanke yesterday said the job market is still weak, one reason why policy makers will continue buying bonds in a bid to keep interest rates low and spur growth.
“We’re definitely moving in the right direction,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York, who correctly predicted the drop in applications. “If we can get back to 330,000 or lower, that’s going to be an early sign that the economy is accelerating into the second half of the year.”
Other reports today showed consumer confidence is hovered last week around a five-year high and sales of new houses climbed more than forecast in April.
The weekly Bloomberg Consumer Comfort Index increased to minus 29.4 for the period ended May 19 from minus 30.2 the prior week. A measure of personal finances was positive for a sixth consecutive week, the longest stretch in more than five years.
Sales of new homes increased 2.3% to a three-month high of 454,000 homes at an annualized pace from a 444,000 rate in March that was faster than first estimated, the Commerce Department said. The median estimate of 76 economists surveyed by Bloomberg called for a gain to 425,000. The data included revisions back to January 2011. The median selling price rose to a record on sales of more expensive properties.
Stock fell as other data showed Chinese manufacturing unexpectedly shrank and equity markets from Europe to Japan tumbled. The Standard & Poor’s 500 Index dropped 0.7% to 1,644.45 at 10:13 a.m. in New York.
Economists’ estimates in the Bloomberg survey ranged from 338,000 to 360,000. The Labor Department revised the previous week’s figure to 363,000 from an initially reported 360,000.
The four-week moving average, a less volatile measure than the weekly figures, dropped to 339,500 last week from 340,000.
Today’s report corresponds to the week the Labor Department surveys businesses to calculate the May payroll data. The four- week average for this month’s survey period was down from 362,000 in the comparable week in April, when the data turned volatile because of the Easter holiday.
Initial jobless claims reflect weekly firings and tend to fall as job growth, which is measured by the monthly non-farm payrolls report, accelerates.
The number of people continuing to receive jobless benefits decreased by 112,000 to 2.91 million in the week ended May 11, the fewest since March 2008, according to today’s the report. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments dropped by about 15,500 to 1.78 million in the week ended May 4.
The unemployment rate among people eligible for benefits held at 2.3% in the week ended May 11, today’s report showed.
Thirty-one states and territories reported a decrease in claims, while 22 reported an increase. These data are reported with a one-week lag.
A two percentage-point rise in the payroll tax at the start of 2013 and $85 billion in automatic spending cuts that began on March 1 are threatening growth. The economy may cool to a 1.6% pace this quarter, after growing at a 2.5% rate in the first three months of 2013, according to the median forecast in a Bloomberg economist survey from May 3 to May 8.
Caterpillar Inc., the world’s largest maker of construction and mining equipment, has made job cuts. The company saw global total machine retail sales fall 9% in the three months through April from a year ago, smaller than the 11% drop in the quarter through March, the Peoria, Illinois- based company said May 20 in a filing.
“Mining is still very bad,” Stuart L. Levenick, president of the company’s customer and dealer support group, has previously said during a May 8 presentation. “I think we announced another layoff in Decatur, Illinois, just in light of the fact that there aren’t orders yet to fill up production slots going forward.”
Bernanke yesterday said the economy remains hampered by high unemployment and government spending cuts, and raising interest rates or reducing asset purchases too soon would endanger the recovery.
“A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further,” Bernanke said in testimony to the Joint Economic Committee of Congress. Monetary policy is providing “significant benefits,” he said.
He pointed to the historically high levels of unemployment and long-term joblessness, and to the shrinking of the workforce as signs the job market remains “weak.”
For now, consumers are holding up. Sales at retailers unexpectedly advanced in April, rising 0.1% after a decrease of 0.5% in March, a May 13 report showed.
Buyers may be helped by low inflation. Cost of living in the U.S. fell in April for a second month, the first back-to- back decline in inflation since late 2008, as fuel costs retreated, a Labor Department report showed last week. The consumer-price index dropped 0.4% after declining 0.2% in March.
The job market must add 200,000 or more jobs per month for at least six months before Chicago Federal Reserve President Charles Evans would judge it substantially improved, Evans said in a speech in Chicago.
Employers added 165,000 to payrolls in April after a gain of 138,000 the prior month, according to Labor Department figures issued earlier this month. The jobless rate dropped to a four-year low of 7.5%.