Claims for US unemployment benefits rose less than forecast last week to a level that shows companies may be starting to slow the pace of dismissals.
Applications for jobless benefits increased by 6,000 in the week ended October 1 to 401,000, Labour Department figures showed on Thursday. Economists projected 410,000 claims, according to the median estimate in a Bloomberg News survey. The monthly average dropped to the lowest level since the end of August.
Reductions in firings may set the stage for bigger gains in payrolls needed to bring down the unemployment rate, signaling more confidence among companies that demand will hold up. Employers added 59,000 workers to payrolls in September and the unemployment rate held at 9.1 per cent, according to the median forecast of economists before tomorrow’s jobs report.
“The 400,000 level is sort of a big level; below that is consistent with better labour market progress,” said Sean Incremona, a senior economist at 4Cast Inc in New York. Still, “at this stage, it does seem like the labour market is stagnating,” he said.
Estimates for first-time claims ranged from 385,000 to 435,000 in the Bloomberg survey of 50 economists. The Labour Department initially reported the prior week’s applications at 391,000, citing difficulties with seasonal adjustments to the data.
Stock-index futures held gains after the report. The contract on the Standard & Poor’s 500 Index expiring in December rose 0.7 per cent to 1,142.8 at 8.47 am in New York. Treasuries fell, pushing up the yield on the benchmark 10-year note to 1.96 per cent from 1.89 per cent late yesterday.
MONTHLY AVERAGE
The four-week moving average of claims, a less-volatile measure, fell to 414,000, the lowest since August 27, from 418,000. Filings are below the level seen before Hurricane Irene struck the eastern seaboard at the end of August.
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The number of people continuing to collect jobless benefits dropped by 52,000 in the week ended September 24 to 3.7 million, the fewest since July 30. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 28,370 to 3.55 million in the week ended September 17.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 2.9 per cent in the week ended September 24, from 3 per cent, Thursday’s report showed. Forty states and territories reported a decrease in claims during that week, while 13 showed an increase.
PAYROLLS, CLAIMS
Initial jobless claims reflect weekly firings and tend to fall as job growth — measured by the monthly non-farm payrolls report — accelerates.
Federal Reserve Chairman Ben S Bernanke, testifying this week before Congress’s Joint Economic Committee in Washington, said the central bank stood ready to take additional steps to boost growth and urged lawmakers against taking steps to curtain the budget deficit that might harm an already “sluggish” recovery.
Costco Wholesale Corp. (COST), the largest U.S. warehouse-club chain, said the strain on household budgets from limited job and income growth is helping drive more customers to its stores to save on groceries and other goods.
“We’re concerned as every one of you are out there every day with the gyrations in the market and the mortgage statistics and the unemployment statistics,” Chief Financial Officer Richard Galanti said on a conference call with analysts yesterday. “If you asked us do we feel good about what’s going on out there, no, in terms of the economy.”
Lockheed Martin Corp. (LMT), the world’s largest defense contractor, said last month it is cutting 540 jobs, mostly in Texas, Georgia and California. The reduction is part of a plan to cut 1,500 workers.