The number of Americans seeking jobless benefits fell last week to a level that indicates the labour market has not improved this year even as the economy expanded.
Initial jobless claims fell by 6,000 to 472,000 in the week ended August 28, in line with the median forecast of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington. Applications exceeded the 463,000 average so far this year.
Employment is stagnating as businesses, uncertain sales will hold up, delay adding workers. Federal Reserve policy makers, who cut growth forecasts for the second half of 2010, indicated they were concerned lingering unemployment and “elevated” claims were limiting consumer spending, the biggest part of the economy.
“The rate of layoffs is still uncomfortably high,” said Chris Low, chief economist at FTN Financial in New York. “This continues to feed the unemployment rolls. We see no reason to expect an acceleration in consumer spending.”
Stock-index futures held earlier gains after the report. Futures on the Standard & Poor’s 500 Index expiring this month rose less than 0.1 per cent to 1,082.5 at 9.03 am in New York. The yield on the 10-year Treasury note increased to 2.61 per cent from 2.58 per cent late yesterday.
Employment report
The August payrolls report may show tomorrow the economy lost 100,000 jobs, the third straight monthly decline, according to the Bloomberg survey median. The drop will reflect dismissals of temporary government workers who were hired for the census. The unemployment rate rose to 9.6 per cent, economists forecast.
The productivity of US workers fell more than previously estimated in the second quarter, pushing up labour costs and showing the slowdown in growth will limit profits, another Labor Department report today showed.
The measure of employee output per hour dropped at a 1.8 per cent annual rate, the biggest decline in almost four years.
Jobless benefits applications were projected to rise to 475,000 from 473,000 initially reported for the prior week, according to the median forecast of 40 economists in a Bloomberg survey. Estimates ranged from 460,000 to 485,000. The Labor Department revised the prior week’s figure up to 478,000.
Pending US home sales
Pending sales of existing houses unexpectedly climbed in July from a record low, indicating the real-estate market is steadying following the end of a government tax credit.
The index of purchase contracts rose 5.2 per cent after a revised 2.8 per cent drop the prior month, figures from the National Association of Realtors showed today in Washington. Combined with data showing claims for unemployment benefits dropped and orders to factories increased, the reports allayed concern the economy was tipping back into a recession.
“We’re growing at a mediocre clip,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “We just haven’t rebounded sufficiently from the severe recession.”
Home sales plunged following the April 30 deadline to sign contracts and become eligible for a government tax credit worth up to $8,000. While record-low mortgage rates are helping to make homes more affordable, further gains depend on the economy creating jobs.
The July rebound “points to some stabilisation in existing home sales at very low levels in August,” Yelena Shulyatyeva, an economist at BNP Paribas in New York, said in an e-mail. “The housing market outlook remains highly uncertain in light of mounting inventories from foreclosed and vacant properties.”
US retailers
US retailers reported August sales that beat analysts’ estimates as back-to-school discounts and tax holidays lured consumers to the mall.
Sales at Limited Brands Inc, owner of the Victoria’s Secret chain, climbed 10 per cent, more than the 7 per cent average of analysts’ estimates compiled by Retail Metrics Inc Sales at Kohl’s Corp, the department-store chain, rose 4.5 per cent compared with a 3.2 per cent projection. Sales at Gap Inc were unchanged, beating estimates for a 0.5 per cent drop.
Confidence among US consumers rose more than forecast last month, with the Conference Board’s index rising from a five-month low in July. Seventeen tax-free holidays during August probably attracted extra shoppers to the mall, where discounts grew deeper than the previous month, said Ken Perkins, president of Retail Metrics.
“The tax-free holidays really gave a boost,” Perkins said today in an interview. “Retailers came out of the gates strong on the promotional front in the last week of July and that carried through for basically the entire month of August.”
Limited, based in Columbus, Ohio, rose $1.06 to $25.33 at 10.03 am in NYSE trading. Menomonee Falls, Wisconsin-based Kohl’s, the fourth-largest US department-store chain, climbed 77 cents to $49.17 and San Francisco-based Gap, operator of Old Navy and Banana Republic chains, added 35 cents to $17.56.
US car sales
Toyota and Honda, beneficiaries last year of US “cash for clunkers” incentives, had the steepest August sales declines among large carmakers because of the programme’s end and a slowing economy.
Asia-based brands had a combined 29 per cent decline, compared with a 14 per cent dip for US-based General Motors Co, Ford and Chrysler, and topping a 21 per cent industrywide drop.
Toyota sold 34 per cent fewer vehicles in the United States than in August 2009, while Honda’s volume plunged 33 per cent.
