Initial jobless claims in the U.S. fell while remaining at a level that shows the labor market will take time to heal.
Jobless claims fell by 14,000 to 418,000 in the week ended July 2, Labor Department figures showed today in Washington. The median forecast of economists in a Bloomberg News survey called for a drop to 420,000. The number of people on unemployment benefit rolls and those getting extended payments also declined.
Supply-chain disruptions from Japan’s March earthquake, European default concerns and gasoline prices that neared $4 a gallon prompted some companies in recent weeks to fire workers, further weighing on the consumer spending that makes up two thirds of the economy. Economists surveyed by Bloomberg forecast the Labor Department will report tomorrow that the unemployment rate in June held unchanged at 9.1 percent.
“It’s still not low,” said Robert Brusca, president of Fact & Opinion Economics in New York. “The moving average has been stuck in this 420,000 to 430,000 range. It’s basically been doing the same thing for the last six, seven weeks. The supporting data about the job market suggest last month’s weak jobs report was not a one-off, that job growth is actually weaker than previously thought.”
Stock-index futures held gains and Treasury securities fell after the report. Futures on the Standard & Poor’s 500 Index increased 0.8 percent to 1,346.00 at 8:47 a.m. in New York. The yield on the 10-year Treasury note, which moves inversely to prices, rose to 3.16 percent from 3.11 percent late yesterday.
Bloomberg Survey
Estimates in the Bloomberg survey of 48 economists ranged from 400,000 to 435,000.
Today’s data show the four-week moving average, a less volatile measure than the weekly figures, fell to 424,750 last week after 427,750 the previous week.
The number of people continuing to receive jobless benefits dropped by 43,000 in the week ended June 25 to 3.68 million. They were forecast to decrease to 3.7 million.
The continuing claims figure does not include the number of Americans receiving extended and emergency benefits under state and federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 88,400 to 3.85 million in the week ended June 18.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 2.9 percent in the week ended June 25, from 3.0 percent in the prior week.
Thirty-one states and territories reported a decline in claims, while 22 reported an increase. These data are reported with a one-week lag.
Weekly Firings
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
The projected gain in June payrolls would be nearly double the 54,000 reported in May, which was the fewest in eight months. Economists forecast the unemployment rate will remain unchanged at 9.1 percent.
The lack of a pickup in the labor market and an economy that’s slowing reinforce the decision of Fed policy makers to keep interest rates close to zero for an extended period.
“Recent labor market indicators have been weaker than anticipated,” central bankers said in a statement on June 22 after a two-day meeting. “The slower pace of the recovery reflects in part factors that are likely to be temporary,” such as supply-chain disruptions stemming from the Japanese disaster.
Companies continue to cut jobs. Lockheed Martin Corp. (LMT), the world’s largest defense contractor, plans to eliminate about 1,500 employees from its Aeronautics business unit that makes F- 35 jet fighters, the company said June 30.
Voluntary Retirement
Salaried employees will be offered a voluntary retirement option, the company said. In the event the plan fails to achieve the company’s goal of cutting 1,500 jobs, it will begin firing people in mid-September, Lockheed said.
“We expect the greatest impact to be on employees in higher-level labor grades,” the company said.
Goldman Sachs Group Inc. (GS), the fifth-biggest U.S. bank by assets, plans to cut 230 jobs in New York, according to a June 29 filing the firm submitted to the state’s Department of Labor.
The positions, which weren’t identified, will be eliminated for economic reasons between Sept. 26 and March 31, the filing shows.
States and local governments are also cutting jobs as they grapple with ballooning budget deficits. Facing a projected budget shortfall of $587 million, Chicago Mayor Rahm Emanuel told city unions June 29 that he will fire 625 workers unless they agree to work-rule changes.
To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
