The number of Americans filing first-time claims for unemployment insurance payments declined last week, pointing to gradual improvement in the labor market.
Applications for jobless benefits decreased by 2,000 to 370,000 in the week ended May 19 from a revised 372,000 the prior week, Labor Department figures showed today. The initial claims matched the median estimate in a Bloomberg News survey of economists. The number of people on unemployment benefit rolls and those receiving extended payments dropped.
Unemployment claims have retreated from an almost four-year low earlier this year while remaining at a level that suggests the job market will be slow to heal, said Jay Feldman, an economist at Credit Suisse in New York. Absent fewer firings, companies in the U.S. may not ramp up hiring to levels leading to bigger payroll growth.
“The labor market is getting better, moving in the right direction, but there is still a long way to go,” said Feldman, who correctly forecast the claims figure. “Moderate growth is the story, and the truth is somewhere in between the wintertime surge and the slower growth over the past couple of months.”
Orders for computers, machinery and other capital equipment dropped in April for a second month, pointing to a slowdown in U.S. business investment, another report showed today. Bookings for non-military goods excluding aircraft decreased 1.9 percent after falling 2.2 percent in March, the first back-to-back decline in a year, data from the Commerce Department said.
Stocks Little Changed
U.S. stocks were little changed after the reports. The Standard & Poor’s 500 Index declined less than 0.1 percent to 1,318.34 at 10:27 a.m. New York time. The yield on the 10-year Treasury note climbed to 1.77 percent from 1.74 percent late yesterday.
Estimates for first-time claims ranged from 360,000 to 393,000 in the Bloomberg survey of 46 economists. The Labor Department initially reported the prior week’s applications at 370,000.
The four-week moving average, a less-volatile measure, fell to 370,000, the lowest in a month, from 375,500.
The number of people continuing to collect jobless benefits dropped by 29,000 in the week ended May 12 to 3.26 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 40,300 to 2.93 million in the week ended May 5.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 2.6 percent in the week ended May 12, today’s report showed. Thirty-six states and territories reported an increase in claims, while 17 reported a decrease.
Initial jobless claims reflect weekly firings and tend to fall as job growth, measured by the monthly non-farm payrolls report, accelerates.
Companies added 115,000 employees to payrolls last month, the fewest since October, and the jobless rate fell to 8.1 percent as people left the labor force, according to May 4 figures from the Labor Department.
Economists foresee the pace of job creation rising to 150,000 from April’s six-month low, according to the median estimate in a Bloomberg News survey. Even so, such a rate of job creation would be lower than any month in the first quarter.
“Circumstances today in the U.S. call for continued measured efforts to quicken the pace of recovery and shrink unemployment,” Federal Reserve Bank of Atlanta Dennis Lockhart said during a May 21 speech. “Current economic data continue to be a mix of positives and negatives.”
General Mills Inc. (GIS) is among companies adding people to the pool of unemployed workers. The maker of Wheaties cereal and Yoplait yogurt said this week it will cut 850 jobs worldwide to boost productivity and manage costs. The reductions will be mostly administrative and support positions, and about half will be at the company’s Minneapolis headquarters, according to a May 22 statement.
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