The number of Americans filing applications for unemployment benefits fell to the lowest level in seven months, a sign the recovery may be encouraging companies to limit cuts in headcount.
Jobless claims fell by 10,000 to 390,000 in the week ended Nov. 5, Labor Department figures showed today in Washington. The median forecast of economists in a Bloomberg News survey called for 400,000 new claims. The number of people on unemployment benefit rolls decreased, while those getting extended payments rose.
Waning dismissals pave the way for bigger gains in payrolls and in consumer spending, which accounts for about 70 percent of the economy. At the same time, a pickup in hiring is needed to cut the unemployment rate, which Federal Reserve officials predict will not drop below 8 percent until 2013.
“Today’s report is a positive sign for the state of the labor market in the fourth quarter,” said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston. “The economy remains very exposed to potential turbulence in the euro zone, but at least the economy is growing at a decent clip. Job retention is pretty high. Businesses have been very carefully managing their headcount.”
Futures on the Standard & Poor’s 500 Index expiring in December rose 1.4 percent to 1,243.10 at 8:37 a.m. in New York, after the report was issued. The yield on the 10-year Treasury note rose to 2.05 percent from 1.96 percent late yesterday.
Jobless benefits applications were projected to increase from 397,000 initially reported for the prior week, according to the median forecast of 46 economists in a Bloomberg survey. Estimates ranged from 390,000 to 420,000. The Labor Department revised the prior week’s figure to 400,000.
Today’s data showed the four-week moving average, a less volatile measure than the weekly figures, fell to 400,000 last week, the lowest since April, from 405,250 the previous week.
The number of people continuing to receive jobless benefits fell by 92,000 in the week ended Oct. 29 to 3.62 million. They were forecast at 3.68 million.
The continuing claims 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 increased by about 43,500 to 3.53 million in the week ended Oct. 22.
Some businesses see the need for more workers. Macy’s Inc., the second-biggest U.S. department-store chain, is stepping up hiring of mostly part-time employees by 4 percent for the November-December holiday shopping season.
Companies pulling back include Whirlpool Corp., the world’s largest maker of household appliances, which plans to cut more than 5,000 jobs.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 2.9 percent.
Twenty-seven states and territories reported a decline in claims, while 26 reported an increase. 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.
Payrolls grew by 80,000 workers in October, and gains in the prior two months were revised up by 102,000, Labor Department figures showed last week. The unemployment rate fell to 9 percent from 9.1 percent.
Separate figures released this week showed job openings in September increased by 225,000 to 3.35 million, the most since August 2008, a month before the collapse of Lehman Brothers Holdings Inc. intensified the financial crisis. Hiring advanced while firings also climbed.
Fed policy makers this month projected economic growth of 2.5 percent to 2.9 percent for next year, with unemployment in the 8.5 percent to 8.7 percent range. They forecast joblessness in 2013 will be 7.8 percent to 8.2 percent.
“While we still expect that economic activity and labor market conditions will improve gradually over time, the pace of progress is likely to be frustratingly slow,” Fed Chairman Ben S. Bernanke said in a Nov. 2 press conference in Washington.