The number of Americans seeking unemployment benefits unexpectedly declined and manufacturing in the Philadelphia area contracted, highlighting forecasts for an uneven pace of economic recovery.
Initial jobless claims dropped by 3,000 to 450,000 in the week ended Sept. 11, the lowest level in two months, the Labor Department reported today in Washington. The Federal Reserve Bank of Philadelphia said its general economic index rose to minus 0.7 in September from minus 7.7 in August.
While the pace of staff cuts has slowed, ongoing reductions at companies like FedEx Corp. are a reminder that it will take years to recover the 8.4 million jobs lost in the recession. Manufacturers, who led the rebound from the worst economic slump since the 1930s, are scaling back on concern consumer demand will be restrained by unemployment close to a 26-year high.
“The labor market is moving in the right direction but we still have a long ways to go,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “Manufacturing is showing signs of fatigue.”
Stocks trimmed losses as Apple Inc. led technology shares higher before the release of the iPad tablet computer in China, overshadowing a lower-than-estimated forecast at FedEx. The Standard & Poor’s 500 Index fell less than 0.1 percent to 1,124.66 at the 4 p.m. close in New York. Treasury securities dropped, sending the yield on the 10-year note up to 2.76 percent from 2.72 percent late yesterday.
Better than Projected
Jobless benefits applications were projected to rise to 459,000 from a previously reported 451,000 for the prior week, according to the median forecast of 42 economists in the Bloomberg survey. Estimates ranged from 435,000 to 476,000. Filings last week were the lowest since mid July.
Negative readings for the Fed Bank of Philadelphia’s index signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware. The median estimate of economists surveyed by Bloomberg News projected the gauge would turn positive.
Other reports today showed wholesale prices rose for a second month, the deficit in the current-account widened and international demand for long-term U.S. assets increased.
The four-week moving average of jobless claims declined to 464,750 last week from 478,250, today’s report showed.
The number of people continuing to receive jobless benefits fell by 84,000 in the week ended Sept. 4 to 4.49 million. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments slumped by 507,853 to 4.96 million in the week ended Aug. 28.
The Memphis, Tennessee-based FedEx, the second-largest U.S. package-shipping company, today said it will eliminate 1,700 jobs, less than 1 percent of its global workforce.
“We expect a phase of somewhat slower economic growth going forward,” Chief Executive Officer Fred Smith said on a conference call with analysts. “Slower growth is consistent with historical business cycles.”
Companies added 67,000 workers to their payrolls in August after expanding staff by 107,000 the prior month, the Labor Department said Sept. 3. Overall employment dropped by 54,000 for a second month as the government let go on temporary census workers, and the unemployment rate rose to 9.6 percent from 9.5 percent.
President Barack Obama wants Congress to boost job growth by approving $50 billion to repair and rebuild the U.S. transportation infrastructure, permanently extend a research and development tax credit and let businesses deduct the full cost of capital investments in the year the expenditures are made, instead of writing them off over periods of as long as 20 years.
Obama’s approval ratings have slipped as economic growth slowed this year and employment stagnated. Fifty-six percent of voters said they disapproved of his handling of the economy, according to a poll by Quinnipiac University taken Aug. 31 to Sept. 7.
Poverty in the U.S. rose to the highest level in 15 years in 2009, underscoring the toll the recession took on household incomes, figures from the Census Bureau released today also showed. The poverty rate climbed to 14.3 percent from 13.2 percent, and the number of people classified as poor rose to 43.6 million, the largest number in the 51 years for which the figures have been published.
Wholesale prices climbed 0.4 percent in August after rising 0.2 percent the prior month, figures from the Labor Department showed. The increases have helped ease concern weak growth would lead to a period of deflation, or protracted declines that hurt the economy. Producer prices dropped from April through June.
“There’s persistent price softness in the economy, but we’re not immediately facing deflation,” said David Resler, chief economist at Nomura Securities International Inc. in New York. “Inflation is likely to remain low. We don’t see the Fed raising interest rates until 2013.”
The current-account gap, the broadest measure of international trade because it includes income payments and government transfers, rose to $123.3 billion in the second quarter, reflecting a surge in imports, The Commerce Department reported today.
Net global buying of U.S. equities, notes and bonds totaled $61.2 billion in July, up from net purchases of $44.4 billion the previous month, according to data from the Treasury Department.
The gains signal global investors continue to view U.S. assets as safe and liquid even as trade and budget gaps swell.