The number of Americans who filed applications for unemployment benefits last week rose to the highest in almost two months, highlighting the Federal Reserve’s view the economy isn’t expanding fast enough to drive bigger job gains.
Jobless claims increased 15,000 in the week ended Sept. 8 to 382,000, Labor Department figures showed today in Washington. The median forecast of 50 economists surveyed by Bloomberg called for 370,000 claims.
Employment is cooling as a global slowdown and looming U.S. tax policy changes keep businesses hesitant about hiring. Persistent joblessness, which Fed Chairman Ben S. Bernanke called a “grave concern,” persuaded policy makers today to take another step to bolster the world’s biggest economy.
“The labor market is essentially gaining no traction at all,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, who projected claims would rise to 380,000. “The Fed chairman’s concern about the labor market is warranted. Aside from energy, prices are well-contained. These are the kind of numbers that suggest the economy needs help.”
A surge in the cost of crude oil led to the biggest increase in wholesale prices last month in more than three years. The producer price index climbed 1.7 percent after a 0.3 percent rise in July, the Labor Department also said today. Core wholesale inflation, which excludes food and fuel, rose 0.2 percent, in line with the median forecast in the Bloomberg survey.
The Fed, after concluding a two-day meeting today, said that it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative easing.
Stocks climbed after the Fed’s announcement. The Standard & Poor’s 500 Index rallied 1.6 percent to 1,459.99 at the close in New York.
Last week the S&P 500 climbed 2.2 percent, the most since the period ended June 8 and helped by the European Central Bank’s agreement to an unlimited bond-purchase program aimed at easing the region’s debt crisis. The gain in stocks helped boost consumer sentiment.
Confidence rose last week as higher stock prices made Americans more secure about their finances, the Bloomberg Consumer Comfort Index showed. The gauge climbed to a five-week high of minus 42.2 in the period ended Sept. 9 from minus 46.5. Forty-seven percent of respondents rated their finances positively, the largest share since early August.
Jobless claims estimates ranged from 360,000 to 380,000. The Labor Department revised the previous week’s figure to 367,000, from an initially reported 365,000. Tropical Storm Isaac resulted in about 9,000 applications for benefits last week, the agency said.
The four-week moving average, a less volatile measure than the weekly figures, climbed to 375,000 last week, the highest in almost two months, from 371,750.
Hewlett-Packard Co. (HPQ), the world’s largest personal-computer maker, this week expanded the total job cuts under its reorganization plan announced in May to 29,000, more than the 27,000 it had originally disclosed. The reductions will take place through fiscal year 2014, the Palo Alto, California-based company said.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Hiring is cooling. Payrolls rose by 96,000 workers in August after a revised 141,000 increase in July that was smaller than initially estimated, the Labor Department said on Sept. 7. Private payrolls, which exclude government agencies, rose 103,000 after a revised gain of 162,000.
“If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate,” the Fed’s Open Market Committee said in its statement.
The Fed said it would likely hold the federal funds rate near zero “at least through mid-2015.” Since January, it had said the rate was likely to stay low at least through late 2014. The central bank said “a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.”
The unemployment rate has been stuck above 8 percent since February 2009, the longest stretch in monthly records going back to 1948.
“We are watching unemployment, gas prices, GDP, all those other macro things that would impact the consumer’s willingness to spend,” Robert Niblock, chief executive officer of Lowe’s Cos., the second-largest U.S. home-improvement retailer, said at a conference on Sept. 5.
Bloomberg’s Consumer Comfort Index showed spending may hold up as all three of the gauge’s components improved last week. The barometer of personal finances climbed to minus 6.2 from minus 13.5. The gauge of Americans’ views on the current state of the economy rose to minus 72.4 last week from minus 75.4, and the buying-climate index increased to minus 47.9 from minus 50.6.
The comfort gauge was still below minus 40, a level “associated with deep economic discontent,” for the sixth straight week, according to Gary Langer, president of New York- based Langer Research Associates, which compiles the index for Bloomberg.
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