The number of Americans applying for jobless benefits declined last week from a two-month high, pointing to an improvement in the labor market that is taking time to develop.
Initial jobless claims decreased by 19,000 to 457,000 in the week ended June 19, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance fell, while those getting extended benefits rose.
Payrolls have risen every month this year, yet the pace of private hiring hasn’t been strong enough to spur self-sustaining gains in consumer spending. The government next week may report the U.S. lost jobs in June for the first month this year after the government dismissed temporary census workers, according to economists’ estimates.
“The trend certainly has been towards improvement in the labor market,” said Jim O’Sullivan, global chief economist at MF Global Ltd. in New York. “The question is to what extent the improving momentum has been disrupted by the turmoil in the markets. It’s possible the labor market has lost a little momentum.”
Companies are showing little concern about boosting investment in new equipment, figures from the Commerce Department also showed today. Orders for durable goods excluding transportation rose 0.9 percent in May, the third gain in the past four months, indicating manufacturing will help maintain the economic recovery.
Stock-index futures trimmed earlier losses after the reports. The contract on the Standard & Poor’s 500 Index fell 0.4 percent to 1,083 at 8:53 a.m. in New York, indicating shares may slip for a fourth day, on concern the European debt crisis will slow global growth. Treasury securities rose, pushing the yield on the benchmark 10-year note down to 3.09 percent from 3.12 percent late yesterday.
Economists forecast jobless applications would fall to 463,000 from an initially reported 472,000 for the prior week, according to the median of 42 projections in a Bloomberg survey. Estimates ranged from 445,000 to 485,000.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
The four-week moving average, a less volatile measure than the weekly figures, dropped to 462,750 last week from 464,250 the prior week, today’s report showed. That puts it at about the 463,000 claims a week averaged so far this year, indicating firings have leveled off rather than slowed in 2010.
The number of people continuing to receive jobless benefits decreased by 45,000 in the week ended June 12 to 4.55 million.
The continuing claims figure does not include the number of Americans receiving extended or emergency benefits under federal programs. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments increased by about 45,000 to 5.3 million in the week ended June 5.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 3.5 percent in the week ended June 12 from 3.6 percent the prior week.
Twelve states and territories reported a decrease in claims, while 41 reported an increase. These data are also reported with a one-week lag.
Federal Reserve policy makers yesterday reiterated a pledge to keep the benchmark interest at a record low for an “extended period” and signaled the fallout from the European debt crisis poised a risk for economic growth. They acknowledged the labor market was “improving gradually,” even as employers are reluctant to boost hiring.
The economy lost 8.4 million jobs during the recession that began in December 2007, the biggest employment slump in the post-World War II era. From January through May, company payrolls grew by 495,000 workers. A Labor Department report July 2 may show total payrolls fell in June as census neared completion, allowing the federal government to cut temporary jobs associated with the decennial population count.
Claims around 450,000 are consistent with private companies adding about 100,000 jobs a month, JPMorgan Chase & Co. chief economist Bruce Kasman said in a note to clients before the June 17 report. That is fewer than the 116,000 a month average growth in the five years to December 2007, when the recession began.
Claims and Payrolls
Initial claims would have to average 425,000 to 430,000 for private payrolls to rise by the 175,000 a month that JPMorgan economists are forecasting for the second half of the year, Kasman said.
Local governments are among employers cutting staff to trim budget deficits.
Newark, New Jersey’s largest city, plans to fire hundreds of workers and seek concessions from unionized employees to help close a $180 million budget deficit, Mayor Cory Booker said.
“The cost of holding onto the employees we have right now is growing at a rate that we cannot keep up,” Booker said last week during his monthly call-in show on a local radio station WBGO. “There will be hundreds of layoffs and this is something that is going to be incredibly difficult. This is not the economy you want to be laid off in.”
Manufacturers are leading private hiring. Toyota Motor Corp. is planning to complete a plant in Blue Springs, Mississippi, and hire 2,000 workers to begin production of Corollas by the end of next year, the world’s largest automaker announced on June 17. The company had mothballed the project 18 months ago as U.S. sales collapsed.
At least 2,000 additional jobs with suppliers are likely to result from the plant project as well, said Mississippi Governor Haley Barbour.
To contact the reporter on this story: Bob Willis in Washington at firstname.lastname@example.org