Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, reflecting the volatility of applications during the annual auto-plant retooling period.
Applications for jobless benefits decreased by 26,000 in the week ended July 7 to 350,000, the fewest since March 2008, Labor Department figures showed today. Economists forecast 372,000 claims, according to the median estimate in a Bloomberg News survey. Last week’s distortion is likely to unwind slowly over coming weeks, a Labor Department spokesman said as the data was released to the press.
Automakers including Chrysler Group LLC, Ford Motor Co. and Nissan Motor Co. are keeping more plants than normal open during this time of year to fulfill demand and replenish inventories. For that reason, it may take time to determine if the labor market is making any progress.
“You can never take claims at face value because of the July shutdowns,” said Jonathan Basile, an economist at Credit Suisse in New York, who projected the number of applications would drop to 355,000. “We are in a period of uncertainty. This makes for a situation where businesses will hold off on taking risks regarding investment and payrolls.”
Prices of imported goods decreased more than forecast in June as declining energy costs curbed inflation, another Labor Department report showed. The 2.7 percent plunge in the import-price index was the biggest since December 2008 and followed a 1.2 percent drop in May. Prices excluding fuel fell 0.3 percent, the most in almost two years.
Stock-index futures held earlier losses after the reports on concern the global economy is weakening. The contract on the Standard & Poor’s 500 Index maturing in September fell 0.8 percent to 1,325.8 at 8:49 a.m. in New York.
Estimates for first-time claims ranged from 355,000 to 395,000 in the Bloomberg News survey of 48 economists. The Labor Department revised the prior week’s figure to 376,000 from an initially reported 374,000.
The timing of auto plant shutdowns to retool for the new model year has been difficult to predict this year, making adjusting the claims data for these seasonal variations more challenging, a Labor Department spokesman said as the figures were released to the press.
Chrysler announced May 2 three U.S. plants would skip normally scheduled two-week midyear shutdowns to meet increased demand. Factories in Detroit and Belvidere, Illinois, and a parts factory in Toledo, Ohio, are staying open. Two more plants are shutting for one week instead of two, according to Auburn Hills, Michigan-based Chrysler.
Dearborn, Michigan-based Ford said May 8 it would boost production by about 40,000 vehicles by idling 13 plants for one week instead of two as part of the company’s annual summer shutdown.
Nissan is also among automakers averting shutdowns. The Yokohama, Japan-based automaker plans to boost hours, add shifts or increase payrolls at plants in Tennessee and Mississippi “to really have the supply catch up with demand,” Bill Krueger, Nissan’s vice chairman of the Americas, said in a July 6 telephone interview.
The Labor Department projected a 28 percent increase in unadjusted claims last week, or about 103,000. Instead, there was a 19 percent gain.
The four-week moving average, a less-volatile measure, fell to 376,500 last week from 386,250.
The number of people continuing to collect jobless benefits fell by 14,000 in the week ended June 30 to 3.3 million. The continuing claims figure does not include the number of workers 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 13,300 to 2.65 million in the week ended June 23.
The unemployment rate among people eligible for benefits was 2.6 percent in the week ended June 30, today’s report showed. Thirty-six states and territories reported an increase in claims, while 16 reported a decrease.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Labor Department figures last week showed that the job market is making little progress as payrolls expanded by a less-than-forecast 80,000 in June. Excluding government agencies, private hiring increased 84,000, the weakest in 10 months.
The unemployment rate held at 8.2 percent to mark the 41st consecutive month that joblessness has remained above 8 percent -- the longest stretch of such elevated levels in the post-World War II era.