MW: Jobless Claims in U.S. Fell More Than Forecast Last Week
Fewer Americans than forecast filed applications for unemployment benefits last week, showing companies were looking beyond looming government spending cuts and maintaining staffing.
Jobless claims decreased by 22,000 to 344,000 in the week ended Feb. 23, the Labor Department reported today in Washington. The median forecast of 44 economists surveyed by Bloomberg called for 360,000 applications. The number of people collecting unemployment insurance dropped to the lowest level since June 2008.
Stable headcounts are a sign demand is holding up in the face of rising gasoline prices, possible federal budget cuts and higher payroll taxes that are cutting into workers’ take-home pay. At the same time, further declines in firings are needed to stoke bigger gains in hiring and the economy.
“There’s no sign of any new weakening in job growth,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York, said before the report. O’Sullivan was the third-best forecaster of initial claims over the past two years, according to data compiled by Bloomberg. “The pace of employment growth is being sustained. That’s more than sufficient to keep unemployment down.”
Another report showed the economy barely expanded in the fourth quarter, erasing a previously estimated contraction, as the smallest trade deficit in almost three years helped overcome the biggest plunge in defense spending since the Vietnam War era. Gross domestic product grew at a 0.1 percent annual rate, up from a previously estimated 0.1 percent drop, revised figures from the Commerce Department showed today in Washington.
Stock Futures
Stock-index futures were little changed after the reports. The contract on the Standard & Poor’s 500 Index maturing in March rose less than 0.1 percent to 1,516.1 at 8:35 a.m. in New York.
Economists’ jobless claims estimates in the Bloomberg survey ranged from 345,000 to 387,000 claims after a previously reported 362,000 in the previous week. No states were estimated during the latest week, which included the Presidents’ Day holiday, a Labor Department official said as the figures were released.
The less-volatile four-week moving average fell to 355,000 from 361,750.
The number of people continuing to receive jobless benefits dropped by 91,000 to 3.07 million in the week ended Feb. 16, the fewest since the period ended June 21, 2008. The continuing claims figure doesn’t include Americans receiving extended unemployment benefits under federal programs.
Emergency Claims
Those people collecting emergency and extended payments increased by about 187,000 to 2.01 million in the week ended Feb. 9.
The unemployment rate among Americans eligible for benefits fell to 2.4 percent in the week ended Feb. 16, from 2.5 percent in the prior week, today’s report showed.
Forty-nine states and territories reported a drop in claims during the week ended Feb. 16, while four said they increased. Ohio, Michigan and New York were among the states that said there were fewer layoffs in manufacturing. At the same time, first-time claims in California rose by almost 27,000 with the increase coming across all industries.
Initial jobless claims reflect weekly firings and tend to fall as job growth, measured by the monthly non-farm payrolls report, accelerates.
Budget Cutbacks
The looming government spending cuts known as sequestration, which will start tomorrow without resolution by lawmakers, may result in more people filing claims for unemployment insurance.
President Barack Obama this week traveled to a shipyard in Newport News, Virginia, to warn that $85 billion in across-the- board spending cuts could hurt the U.S. economy. At the shipyard, owned by Huntington Ingalls Industries Inc. (HII), work on a nuclear-powered aircraft carrier has been delayed and plans to hire more than 10,000 people over the next five years are in doubt.
If the government contracts are cut, the company could begin laying off workers, Chief Executive Officer Mike Petters said on a Feb. 27 earnings call. He also faulted lawmakers for failing to pass a defense budget to replace the current spending plan, which expires March 27.
“I was once told that short-term decisions in this business are political and long-term ones are economic. We’re quite frankly in the middle of a big political decision right now,” Petters said. “The next month is going to be a pretty dynamic time.”
To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
