The number of Americans filing applications for unemployment benefits fell more than forecast last week, a sign that the U.S. labor market continues to make progress.
Jobless claims in the week ended Aug. 24 dropped 6,000 to 331,000 from a revised 337,000 the week before that was higher than initially reported, the Labor Department said today in Washington. The median forecast of 50 economists surveyed by Bloomberg called for a drop to 332,000.
As the effects of higher taxes and federal budget cuts begin to fade, employers are preparing for rising demand and improved growth by maintaining their workforces. While companies are reluctant to fire workers, they’ve made less progress on creating new jobs as they brace for a political showdown over the deficit, new health care laws and the Federal Reserve’s plan to dial down its record $85 billion-a-month stimulus.
“The trend remains very encouraging,” said Ryan Sweet, senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “It suggests the job market is strengthening.”
Stock-index futures held earlier gains after the claims report and a separate report from the Commerce Department showing the U.S. economy expanded at a faster pace in the second quarter. The contract on the Standard & Poor’s 500 Index maturing in September climbed 0.4% to 1,638.2 at 8:32 a.m. in New York.
Economists’ estimates in the Bloomberg survey ranged from a drop to 318,000 to an increase to 345,000 for last week’s claims. The Labor Department revised the figure for the week ended Aug. 17 from an initially reported 336,000.
The number of people continuing to receive jobless benefits dropped by 14,000 to 2.99 million in the week ended Aug. 17. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
The four-week moving average, a less-volatile measure than the weekly figures, rose to 331,250 last week from 330,500 the previous week.
The number of longer-term unemployed collecting federal emergency and extended payments rose by about 10,500 to 1.51 million in the week ended Aug. 10.
The unemployment rate among people eligible for benefits was steady at 2.3% in the week ended Aug. 17 on a seasonally adjusted basis, the report showed.
Forty-three states and territories reported a decrease in claims, while 10 reported an increase for the week ended Aug. 17.
Initial jobless claims reflect weekly firings and typically wane before job growth can accelerate. Employers in July added the fewest number of workers in four months, even as the jobless rate dropped to a more than four-year low of 7.4% from 7.6%, the Labor Department reported earlier this month.
Companies including Sprint Corp., Walt Disney Co. and Wells Fargo & Co. are shedding workers as they seek to do more with less or adapt to changing market conditions. In Washington, the Defense Department is drafting plans to fire more than 6,200 civilian employees if automatic spending cuts that began in March are triggered again next year.
Wells Fargo is shedding mortgage jobs as higher interest rates make refinancing less attractive. Those loans, which made up 70% of the mortgage market during the first half, slid to about 50% and could fall further in coming months, Franklin Codel, head of mortgage production for the San Francisco-based bank, said in a memo to staff last week.
“We’ve had to recalibrate our business to meet customers’ needs -- and to ensure we’re operating as efficiently and effectively as possible,” Codel wrote. “Unfortunately, displacements within our team are necessary.”
Other companies, including food outlets such as Red Robin Gourmet Burgers Inc., are hiring as they expand operations in response to growing demand. The Greenwood Village, Colorado, eatery plans to open 20 new restaurants next year.
Federal Reserve officials are watching the job market and other economic data to determine when to begin scaling back the central bank’s monthly bond purchases. In July, policy makers affirmed a pledge to continue the purchase program until they saw signs that the labor market outlook had “improved substantially.”