The number of Americans filing first-time claims for unemployment insurance fell to 457,000 last week, a figure that signals the labor market will be slow to improve even as the economy grows.
Initial jobless claims dropped by 11,000 in the week ended July 24 from a revised 468,000, Labor Department figures showed today in Washington. Applications were in line with the median forecast in a Bloomberg News survey. The number of people receiving unemployment benefits rose, while those getting extended payments declined.
Limited job gains may restrain consumer spending, underscoring forecasts the recovery will cool in the second half. A slowing in the pace of economic growth as seen by companies such as International Paper Co. may dissuade businesses from adding to payrolls.
“The underlying pace of claims has not made any measurable improvement,” said Ellen Zentner, senior U.S. macro economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Businesses are investing in equipment but other than that there’s little impetus” for them to hire, she said.
Economists forecast claims would fall to 460,000, from a previously reported 464,000 for the prior week, according to the median of 42 projections in a Bloomberg survey. Estimates ranged from 445,000 to 500,000.
Stocks fell as earnings and forecasts that disappointed investors at technology and consumer-dependent companies wiped out an early advance. The Standard & Poor’s 500 Index dropped 0.4 percent to 1,101.53 at the 4 p.m. close in New York. The yield on the 10-year Treasury note fell to 2.98 percent from 2.99 percent late yesterday.
The four-week moving average of claims, a less-volatile measure, dropped to 452,500 last week, the lowest since May 8, from 457,000, today’s report showed.
The number of people continuing to collect unemployment benefits rose to 4.565 million in the week ended July 17, from 4.484 million the prior week.
The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up traditional benefits and are now collecting emergency and extended payments decreased by about 269,000 to 3.66 million in the week ended July 10.
President Barack Obama on July 22 signed into law a measure restoring unemployment benefits that were cut off. The bill provides retroactive aid to those whose checks were cut off when benefits expired June 2, while extending through November a program offering up to 99 weeks of assistance.
States and Territories
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 3.6 percent in the week ended July 17 from 3.5 percent in the prior week. Thirty-seven states and territories reported a decrease in claims during that period, while 16 reported an increase.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates. That relationship has broken down in recent months as some companies continue to cut staff, while others expand, pointing to an uneven recovery.
“The economy is growing, no question about it,” John Faraci, chief executive officer at International Paper, said in an interview yesterday on Bloomberg Television. “We just see the rate of growth in the third quarter not quite as robust or as strong as the second quarter. Things are slowing but they’re still positive.”
United Technologies Corp. said July 26 it expects restructuring actions from the first half of the year to result in job cuts of about 2,400 hourly and salaried employees. The maker of carrier, Pratt & Whitney and Sikorsky products, had eliminated 900 jobs as of June 30 and is targeting most of the rest of the reductions for 2010 and 2011.
The Labor Department is scheduled to release its July payrolls report on Aug. 6. In June, private employers added fewer workers than economists had forecast, while overall payrolls fell, reflecting a drop in federal census workers.
The Federal Reserve, in its Beige Book business survey released yesterday, said employment has “improved gradually in several Districts,” though “modestly.” Some of the Fed’s 12 districts indicated an increase in demand for temporary workers.
Local governments may cut almost 500,000 jobs through next year to cope with sliding property taxes, a decline in state and federal aid and added need for social services, according to a report from the National League of Cities, the U.S. Conference of Mayors and National Association of Counties. The cuts would amount to 8.6 percent of their 2009 workforces, the group said July 27.