Fewer Americans filed applications for unemployment benefits last week, a sign of steady progress in the labor market.
Jobless claims fell by 2,000 to a one-month low of 312,000 in the week ended June 21, the Labor Department reported today in Washington. The median forecast of economists surveyed by Bloomberg called for 310,000 initial claims.
Dismissals are hovering just above their pre-recession lows and hiring has picked up as companies grow confident the economy will snap back from the worst contraction in five years. Employment that’s on pace for its best year since 1999 will need to spark faster wage growth for consumer spending to accelerate.
“What we’re seeing is a mild slowdown in the pace of layoffs,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, who accurately predicted the claims figure. “The trouble with the job market has always been on the hiring side, not the layoff side.”
Another report today showed spending is struggling to pick up. Purchases climbed a less-than-forecast 0.2 percent in May after no change a month earlier, according to Commerce Department data. Adjusted for inflation, consumer spending declined for a second straight month.
Stock-index futures were little changed after the figures, with the contract on the Standard & Poor’s 500 Index expiring in September declining less than 0.1 percent to 1,949.3 at 8:50 a.m. in New York.
Economists’ jobless claims estimates in the Bloomberg survey ranged from 305,000 to 325,000 after an initially reported 312,000 in the week ended June 14.
No states estimated data and there was nothing unusual in the report, a Labor Department spokesman said as the figures were released.
The four-week average of claims, a less-volatile measure than the weekly figure, rose to 314,250 from 312,250 the week before.
The number of people continuing to receive jobless benefits climbed by 12,000 to 2.57 million in the week ended June 14. The unemployment rate among people eligible for benefits rose to 2 percent during that period from 1.9 percent, today’s report showed.
Fewer firings typically foreshadow an acceleration in job growth. Employers added 217,000 workers to payrolls in May, lifting the average monthly advance to 213,600 so far in 2014, the most for a year’s average since 1999.
The gain in hiring shows demand is stabilizing after the economy stumbled in the first three months of the year. A report from the Commerce Department yesterday showed gross domestic product declined at a 2.9 percent annualized rate in the first quarter, the biggest drop in five years.
Employment applications jumped 10 percent at Gap Inc. (GPS) from a year ago after the San Francisco-based retailer said it would raise hourly wages to $10 by next year.
The effect has been striking at the clothing merchant’s lower-end Old Navy chain, where the number of job seekers had been declining. That’s giving stores a better selection of potential workers, said Lynn Albright, Gap’s vice president for Old Navy.
“The more choices you have, the better selection you can make,” Albright said in an interview this week. “It’s so important to have the best brand ambassadors we can find.”
New hires are bringing more experience, often from other retailers that don’t pay as well, Albright said. In the long run, Gap expects the more-qualified employees to drive sales.
The progress in the labor market is also allowing the Federal Reserve to reduce monetary stimulus. Fed policy makers last week trimmed monthly bond purchases by $10 billion for a fifth straight meeting, to $35 billion, keeping them on pace to end the program late this year.
While the labor market shows improvement, “a broader assessment of indicators suggests that underutilization in the labor market remains significant,” Fed Chair Janet Yellen said after the central bank’s two-day meeting.
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