Fewer Americans filed first-time claims for unemployment insurance last week, indicating the labor market is recovering.
Applications for jobless benefits fell 10,000 in the week ended April 2 to 382,000, the fewest since Feb. 26, Labor Department figures showed today. Economists projected claims would be little changed at 385,000, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls and those collecting extended payments decreased.
Fewer firings along with further increases in headcount may help ensure that gains in consumer spending, which accounts for 70 percent of the economy, are sustained. Unemployment that has declined four straight months supports the view of Federal Reserve policy makers that the job market is showing signs of healing.
“The improvement in the labor market is for real,” said Eric Green, chief market economist at TD Securities Inc. in New York. “Growth is on a steady upswing. Sales expectations are rising with more hiring plans.”
Estimates for first-time claims ranged from 373,000 to 400,000 in the Bloomberg survey of 44 economists. The Labor Department initially reported the prior week’s applications at 388,000.
Stock-index futures maintained gains after the report. The contract on the Standard & Poor’s 500 Index expiring in June rose 0.2 percent to 1,331.9 at 8:42 a.m. in New York. The benchmark 10-year Treasury note fell, pushing up the yield to 3.57 percent from 3.55 percent late yesterday.
The four-week moving average, a less volatile measure, dropped to 389,500 from 395,250.
The number of people continuing to collect jobless benefits declined by 9,000 in the week ended March 26 to 3.72 million. The continuing claims figure does 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 decreased by about 91,400 to 4.27 million in the week ended March 19.
The unemployment rate among people eligible for benefits, which tends to track the national jobless rate, held at 3 percent in the week ended March 26. Thirty-three states and territories reported a decrease in claims, while 20 had an increase.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
The unemployment rate in the U.S. unexpectedly fell to a two-year low of 8.8 percent in March as employers created more jobs than forecast, the Labor Department said last week. Payrolls rose by 216,000 after a 194,000 gain in February.
As employment picks up, consumers have the wherewithal to increase spending, encouraging companies to hire more workers. McDonald’s Corp. (MCD), the world’s largest restaurant chain by revenue, is seeking about 50,000 workers in the U.S. during its National Hiring Day event on April 19, the company said in a news release this week.
General Motors Co. (GM) is among companies that says the economy is improving, which may lead to more hiring.
“We continue to see good solid signs of progress despite some of the challenges that remain” for the economy, Don Johnson, vice president of U.S. sales for GM, said during an April 1 teleconference. “A recovering job market is going to be the most important factor for the U.S. economy at this stage, and we do anticipate that this is going to continue to improve.”
The economic recovery “continued to proceed at a moderate pace, with a further gradual improvement in labor market conditions,” minutes of the Fed’s March 15 meeting released this week showed.
While U.S. central bankers unanimously decided during that meeting to maintain their $600 billion stimulus, some of the 10 voting members of the committee thought evidence of a stronger recovery, higher inflation and rising inflation expectations “could make it appropriate to reduce the pace or overall size of the purchase program,” according to the minutes.
“A few participants indicated that economic conditions might warrant a move toward less-accommodative monetary policy this year; a few others noted that exceptional policy accommodation could be appropriate beyond 2011.”
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