The number of Americans filing applications for unemployment benefits unexpectedly declined last week, showing further progress in the labor market.
Jobless claims decreased by 5,000 to 305,000 in the week ended Sept. 21, a Labor Department report showed today in Washington. The median forecast of 49 economists surveyed by Bloomberg called for an increase to 325,000. The four-week average of initial filings fell to the lowest since June 2007.
Fewer dismissals may be a sign employers are optimistic about the demand outlook in the U.S. Further gains in employment and improved income growth will be necessary to spur bigger advances in consumer spending, which accounts for about 70% of the economy.
“The decline in claims is encouraging and suggests ongoing labor-market improvement,” said Gennadiy Goldberg, a strategist at TD Securities USA LLC in New York. “Employers are little bit more positive about the economic outlook.”
A Labor Department official said California and Nevada have caught up with a recent backlog of new applications stemming from a computer system changeover that skewed jobless claims data during the month.
California’s claims in the period ended Sept. 14 surged 22,611 as the state began a full week of processing applications. Filings in Nevada that same week rose 2,504.
Stocks rose after the figures, with the Standard & Poor’s 500 Index advancing 0.5% to 1,701.82 at 10:28 a.m. in New York. The yield on the 10-year Treasury note rose two basis points, or 0.02 percentage point, to 2.65%.
Other reports today showed consumer confidence improved last week, the economy expanded at a faster pace in the second quarter and fewer Americans signed contracts to buy previously owned homes in August.
Gross domestic product rose at a 2.5% annualized rate, unrevised from the previous estimate, after expanding 1.1% in the first quarter, Commerce Department figures showed. The median forecast of economists surveyed by Bloomberg was a 2.6% pace.
The Bloomberg Consumer Comfort Index rose in the week ended Sept. 22 to minus 28.1, the highest since the period ended Aug. 11, from minus 29.4. A gauge of personal finances advanced to a seven-week high as the fewest respondents since late April viewed their budgets as “poor.”
The index of pending home sales fell 1.6%, after a revised 1.4% decrease in July that was bigger than initially reported, figures from the National Association of Realtors showed.
Economists’ estimates for jobless claims in the Bloomberg survey ranged from claims of 310,000 to 370,000 after the prior week’s previously reported 309,000.
The four-week average dropped to 308,000 from 315,000 in the prior week, today’s Labor Department report showed.
The number of people continuing to receive jobless benefits increased by 35,000 to 2.82 million in the week ended Sept. 14. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who have used up their traditional benefits and are now collecting emergency and extended payments increased by about 32,500 to 1.35 million in the week ended Sept. 7.
The unemployment rate among people eligible for benefits increased to 2.2% in the week ended Sept. 14.
Thirty-eight states and territories reported an increase in claims, while 15 reported a decline. These data are reported with a one-week lag.
While the labor market has shown improvement, the slow pace may be a source of concern for some consumers. The Conference Board’s confidence index fell to 79.7 this month, the weakest reading since May. The share of Americans who said jobs would become more plentiful in the next six months fell to 16.9% from 17.5%.
At the same time, the gap between those who said work opportunities are currently scarce, and those who said they’re easy to get, shrank to the lowest since September 2008.
“You’re definitely seeing the assessment of the labor market improve,” said Jacob Oubina, senior economist at RBC Capital Markets LLC in New York.
Wal-Mart Stores Inc. is among companies hiring after eliminating positions during the recession. The retailer is taking on 55,000 seasonal workers and adding another 70,000 part-time and full-time workers as it gears up for the holiday season and reverses workforce reductions that made it hard to keep store shelves stocked.
The U.S. workforce at Wal-Mart’s namesake and Sam’s Club warehouse chains fell by about 120,000 employees in the past five years, to about 1.3 million, according to regulatory filings. In that time, the company has added more than 500 U.S. stores through July 31.