Applications for U.S. unemployment benefits declined more than forecast last week, easing concern that employers will accelerate firings as the world’s largest economy cools.
Initial jobless claims dropped by 27,000 to 451,000 in the week ended Sept. 4, the lowest level in almost two months, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance was little changed, while those getting extended payments rose.
Job creation needs to pick up to prevent a slide in consumer spending, which accounts for 70 percent of the economy, and reduce the risk of a relapse into recession. The Federal Reserve said yesterday in its latest regional survey that the economy maintained its expansion while showing signs of a “deceleration” from mid-July through August.
“It’s still consistent with a pretty lackluster labor market,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, whose forecast of 460,000 initial claims was among the most accurate. “The good news is it’s coming down; the bad news is it’s still pretty high.”
Jobless benefits applications were projected to fall to 470,000 from a previously reported 472,000 for the prior week, according to the median forecast of 46 economists in a Bloomberg News survey. Estimates ranged from 460,000 to 482,000. The Labor Department revised the prior week’s figure to 478,000.
States, Territories
For the latest reporting week, nine states didn’t file claims data to the Labor Department in Washington because of the federal holiday earlier this week, a Labor Department official told reporters. As a result, California and Virginia estimated their figures and the U.S. government estimated the other seven, the official said.
Stocks extended gains and U.S. Treasuries fell after the report. Futures on the Standard & Poor’s 500 Index rose 0.6 percent at 8:46 a.m. in New York. Yields on 10-year notes increased to 2.70 percent from 2.66 percent late yesterday.
A Commerce Department report released today showed the trade deficit in the U.S. narrowed more than forecast in July as imports fell and exports climbed to the highest level in almost two years. The gap shrank 14 percent, the most since February 2009, to $42.8 billion, the report said.
Four-Week Average
The four-week moving average, a less volatile measure than the weekly figures, declined to 477,750 last week from 487,000, today’s report showed.
The number of people continuing to receive jobless benefits fell by 2,000 in the week ended Aug. 28 to 4.48 million. They were forecast to drop to 4.45 million.
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 increased by about 29,300 to 5.47 million in the week ended Aug. 21.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.5 percent in the week ended Aug. 28.
Thirty-five states and territories reported a decline in claims, while 18 reported an increase. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to fall as job growth — measured by the monthly non-farm payrolls report — accelerates.
Job Cuts
Companies added 67,000 workers to their payrolls in August, the Labor Department said last week. Overall employment dropped by 54,000 for a second month, as the government let go census workers. The unemployment rate rose to 9.6 percent from 9.5 percent.
Gannett Co.’s USA Today, which lost more than 200,000 daily readers in the past year, plans to cut 130 jobs as part of a restructuring of the newspaper’s business operations, USA Today Publisher David Hunke said in an e-mail Aug. 27.
Securities firms around the world will cut as many as 80,000 jobs in the next 18 months as revenue growth begins to slow, said Meredith Whitney, the former Oppenheimer & Co. analyst who now runs her own firm.
“Wall Street-centric firms will go through structural changes,” Whitney wrote in a report dated Aug. 31 and obtained by Bloomberg News this week.
Local Governments
Miami is among local governments cutting pay and benefits in order to save jobs while seeking to narrow a budget deficit. The city last month announced plans to cut base salaries as much as 12 percent, raise health-insurance deductibles and co- payments, and reduce pension payouts.
“If we don’t do this today, we go into the doomsday scenario, which is laying off 1,300 workers,” Mayor Tomas Regalado said on the sidelines of a special meeting on Aug. 31.
President Barack Obama is proposing to expand tax relief for businesses and boost federal spending on transportation to help bolster job growth and the economy. In Milwaukee on Sept. 6, Obama called for $50 billion in the first of a six-year program to fix roads, railways and modernize the air-traffic control system.
The president is also urging Congress to extend permanently and expand a research-and-development tax credit for businesses.
The U.S. economy grew at a 1.6 percent annual pace in the second quarter after expanding at a 3.7 percent rate in the first three months of the year and 5 percent at the end of 2009.
