Claims for jobless benefits unexpectedly dropped last week to a three-month low, a sign the US labour market may be starting to mend.
Initial jobless claims decreased by 21,000 to 434,000 in the week ended October 23, the lowest since early July when fewer auto plants than normal closed for retooling, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance dropped to a two-year low, while those getting extended payments also fell.
Consumer spending, which accounts for about 70 per cent of the economy, is beginning to stir and may give employers reason to add workers ahead of the holiday shopping season. Fewer firings are an initial step toward more hiring as companies such as Ford Motor Co see sales improve.
“Certainly these are encouraging numbers,” said Brian Jones, senior economist at Societe Generale SA in New York, who forecast claims would drop to 430,000. At the same time, he said, “given other labour-market readings, you want to be hesitant about saying we’ve turned the corner.”
The Standard & Poor’s 500 Index decreased 0.3 per cent to 1,179.35 at 12.17 pm in New York. Treasury securities also rose, sending the yield on the benchmark 10-year note down to 2.68 per cent from 2.72 per cent yesterday.
Fed action
The Federal Reserve asked bond dealers and investors for projections of central bank asset purchases over the next six months, and how it would affect on yields. The central bank is seeking to gauge the possible impact of so-called quantitative easing aimed at spurring the economy and job growth, according to a New York Fed survey.
The unadjusted claims data showed a 3 per cent increase in applications for the week following the Columbus Day holiday period, smaller than the 7.9 per cent rise that usually occurs during that time of year, a Labor Department spokesman told reporters as the figures were being released. For that reason, the seasonally adjusted figure showed a decrease.
Economists forecast claims would increase to 455,000 from a previously reported 452,000 for the prior week, according to the median of 47 projections in a Bloomberg survey. Estimates ranged from 430,000 to 464,000.