Fewer Americans filed applications for unemployment assistance last week, while those on benefit rolls dropped to a three-year low, signaling limited improvement in the labor market.
First-time jobless claims decreased by 2,000 to 402,000 in the week ended Oct. 22, Labor Department figures showed today in Washington. The median forecast of economists in a Bloomberg News survey called for a drop to 401,000. The number of people collecting unemployment benefits fell in the prior week by 96,000 to 3.65 million, the fewest since September 2008.
Waning dismissals, which lay the groundwork for gains in payrolls, may forestall cutbacks by consumers whose spending accounts for about 70 percent of the economy. At the same time, faster hiring is needed to trim unemployment, lift household confidence and spur the recovery.
“We’re not making much progress,” said Robert Dye, chief economist at Comerica Inc. in Dallas. “Unless we see the labor market improve, we won’t see income growth. The consumer will remain fundamentally constrained.”
The U.S. economy grew in the third quarter at the fastest pace in a year as gains in consumer spending and business investment helped support a recovery on the brink of faltering, Commerce Department figures showed today.
Gross domestic product, the value of all goods and services produced, rose at a 2.5 percent annual rate, matching the median forecast of economists surveyed by Bloomberg and up from a 1.3 percent gain in the prior quarter. Household purchases increased at a more-than-projected 2.4 percent pace.
Stock-index futures maintained gains after the reports and as European leaders agreed to expand a bailout fund to $1.4 trillion in a bid to tame the region’s debt crisis. The contract on the Standard & Poor’s 500 Index expiring in December rose 2.5 percent to 1,268.5 at 8:48 a.m. in New York.
Jobless benefits applications were projected to decline from 403,000 initially reported for the prior week, according to the median forecast of 48 economists in the Bloomberg survey. Estimates ranged from 390,000 to 410,000. The Labor Department revised the prior week’s figure to 404,000.
Today’s data showed the four-week moving average, a less volatile measure than the weekly figures, rose to 405,500 last week from 403,750.
Continuing claims were forecast to decrease to 3.72 million. The figure does not include the number of Americans 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 36,400 to 3.45 million in the week ended Oct. 8.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, declined to 2.9 percent from 3 percent in the prior week.
Forty-nine states and territories reported an increase in unadjusted claims, while four reported a drop. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
A report next week may show employers added about 100,000 workers to payrolls in October after a 103,000 gain in September, according to the Bloomberg survey median. The jobless rate was 9.1 percent for a fourth month, economists projected.
“The pace of job growth in recent quarters has been barely enough to absorb the increase in the labor force and wholly insufficient to produce meaningful declines in unemployment,” Federal Reserve Governor Daniel Tarullo said in an Oct. 20 speech in New York. “The number of new claims for unemployment insurance suggests only modest gains in employment in coming months, while measures of job vacancies seem to have turned down.”
Businesses reporting job cuts last week included Thousand Oaks, California-based Amgen Inc., the world’s largest biotechnology company, which is firing 380 employees in its research and development division. Alamo Group Inc. said it will eliminate 77 workers as it closes a plant in Sioux Falls, South Dakota, to consolidate operations in an Illinois facility.
Some companies are adding staff. FedEx Corp., operator of the world’s largest cargo airline, this week said it plans to hire 20,000 seasonal workers, 18 percent more than last year, to handle a surge in holiday deliveries.