Fewer Americans filed claims for jobless benefits last week, another sign the economy is pulling out of the worst recession since the 1930s.
Applications fell by 10,000 to 570,000, a higher level than forecast, in the week ended August 22 from a revised 580,000 the week before, Labor Department data showed today in Washington. The total number of people collecting unemployment insurance fell to the lowest level since April.
Companies’ staff cuts are easing, as government stimulus measures help stabilize the housing and manufacturing industries. At the same time, a rebound in hiring will take longer to occur, restraining the consumer spending that accounts for about 70 per cent of the economy. “The labor market is improving,” David Sloan, a senior economist at 4Cast Inc in New York, said before the report. “The economy is returning to growth, but employment and consumer spending are going to remain weak for some time.”
Economists forecast claims would fall to 565,000 from a previously reported 576,000, according to the median of 41 projections in a Bloomberg News survey. Estimates ranged from 540,000 to 580,000.
A separate report from the Commerce Department showed the US economy contracted less than forecast in the second quarter, as a jump in government spending and smaller cutbacks by consumers helped mitigate a record plunge in inventories.
Gross Domestic Product shrank at a 1 per cent annual rate from April to June, the same as estimated last month, the department said today in Washington. The report also showed corporate profits climbed the most in four years.
The jobless claims report showed the four-week moving average of initial applications, a less volatile measure, dropped to 566,250 last week from 571,000. Continuing claims plunged by 119,000 in the week ended August 15 to 6.13 million, the least since the week ended April 4.
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The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 4.6 per cent in the week ended August 15, from 4.7 per cent the prior week.
Forty states and territories reported a decrease in claims, while 13 showed an increase. These data are reported with a one- week lag.
Initial jobless claims reflect weekly firings and tend to rise as job growth — measured by the monthly non-farm payrolls report — slows.
While the economy has lost 6.7 million jobs since the recession started in December 2007, the most of any slump in the post-World War II era, firings are abating. The 247,000 drop in payrolls reported for July was the smallest in almost a year and lower than economists projected.
Businesses announcing staff reductions this month included Accenture Ltd, the world’s second-largest technology-consulting firm. The Hamilton, Bermuda-based company said August 20 it will cut about 7 per cent of its senior executive positions, at least 336 jobs.
Companies are watching to see what impact job losses elsewhere will have on their sales. Tesoro Corp., the largest independent refiner in the western US, this week said gasoline demand may lag behind an economic recovery because consumers will need to return to work before they return to the pumps. “We’re waiting on employment, which is a lagging indicator,” said Lynn Westfall, chief economist at San Antonio-based Tesoro. Improvements in economic growth and global trade will likely occur before job gains resume, spurring demand for refined fuels, he added.