Fewer workers than forecast filed claims for unemployment benefits last week, pointing to a drop in firings that signals the U.S. job market is improving.
Applications for jobless insurance payments fell by 3,000 to 420,000, sending the average over the past four weeks to the lowest level since August 2008, according to data from the Labor Department issued today in Washington. Other reports showed work began on more houses last month and manufacturing picked up in the Federal Reserve Bank of Philadelphia region in December.
A decrease in firings would be a harbinger of bigger gains in payrolls that will help bring down the jobless rate, which has been at 9.5 percent or higher for 16 consecutive months, the longest stretch since monthly records began in 1948. Fed policy makers this week said they will continue to buy Treasury securities in a bid to reduce unemployment.
“Hiring is picking up, but there’s still a lot of work to be done,” said Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “The labor market is gaining traction, which should be a positive for housing.”
Stocks rose, with the Standard & Poor’s 500 Index climbing to the highest level since September 2008, after the reports. The S&P 500 gained 0.6 percent to 1,242.87 at the 4 p.m. close in New York. Treasuries increased, pushing down the yield on the benchmark 10-year note to 3.44 percent from 3.53 percent late yesterday.
Economists surveyed by Bloomberg News projected claims would increase to 425,000, according to the median of 48 forecasts. Estimates ranged from 405,000 to 435,000. There were no special factors in last week’s decrease, a Labor Department official said as the figures were released today.
The four-week moving average of claims, a less-volatile measure, decreased to 422,750, the lowest since the week ended Aug. 2, 2008.
“Jobs are what we’ve been really missing and we’ve been awaiting that heralded decline in claims below 400,000,” said John Ryding, chief economist at RDQ Economics LLC in New York. “Things aren’t looking so bad.”
Builders in November began work on more homes for the first time in three months, showing the industry is struggling to recover, Commerce Department figures also showed today. Housing starts rose to a 555,000 annual rate, up 3.9 percent from the previous month. Building permits, a proxy of future work, fell, reflecting a drop in applications for multifamily projects.
Companies like Toll Brothers Inc. anticipate the industry that triggered the worst recession since the 1930s will regain its footing in coming months after the end of a tax credit caused demand to slump. Mounting foreclosures and unemployment near 10 percent mean housing will take years to fully rebound.
“Housing remains stuck in the mud,” said Moody’s Smith, who correctly forecast the pace of starts. “Builders are in a wait-and-see mode. Foreclosures are still problematic and the recent backup in mortgage rates poses a significant threat.”
The median estimate called for a 550,000 pace in starts, based on a survey of 76 economists.
A report from the Philadelphia Fed showed manufacturing in the area covering eastern Pennsylvania, southern New Jersey and Delaware expanded this month at the fastest pace since April 2005 as orders climbed and the workweek lengthened.
The bank’s general economic index unexpectedly rose to 24.3 from 22.5 last month. The gauge was forecast to decrease to 15, according to the median estimate in a Bloomberg survey. Readings greater than zero signal expansion.
Expanding economies in China and other emerging markets, business investment in new equipment and gains in consumer spending are bolstering production. The data indicate manufacturing may keep powering the economic recovery.
“Growth is accelerating,” said Jim O’Sullivan, global chief economist at MF Global Inc. in New York. “There is pretty good momentum going into the new year.”
Broadcom Corp., the biggest maker of chips for television set-top boxes, this week increased its fourth-quarter revenue projection. The Irvine, California-based company is making inroads in the mobile-phone market, supplying radio chips for handsets from South Korea’s Samsung Electronics Co. and Finland’s Nokia Oyj.
“We have seen now an extended period of time of recovery in the components business,” Paul Reilly , chief financial officer of Arrow Electronics Inc., said this week at a conference in New York. Melville, New York-based Arrow is a distributor of electronic components and computer products to industrial customers.
Benefit Rolls Climb
The number of people continuing to collect jobless benefits rose by 22,000 in the week ended Dec. 4 to 4.14 million, today’s report from the Labor Department showed. These data do not include the number of workers receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments increased by 324,537 to 4.83 million in the week ended Nov. 27.
More help may be coming for the unemployed. The Senate yesterday passed an $858 billion tax-cut plan, crafted by President Barack Obama and Republicans that extends Bush-era reductions for all income levels. It also continues expanded unemployment insurance benefits through 2011.
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