Fewer Americans than forecast filed first-time claims for unemployment benefits last week, which may reflect difficulty adjusting the data for seasonal swings at the start of a quarter.
Applications for jobless benefits dropped 30,000 to 339,000 in the week ended Oct. 6, the fewest since February 2008, Labor Department figures showed today. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey. One state accounted for most of the plunge in claims, a Labor Department spokesman said as the data were issued to the press.
A decline in dismissals may mean employers are seeing enough demand to maintain current staff, a necessary first step to bigger gains in hiring. At the same time, a slowing global economy that is hurting exports and concern over looming changes in U.S. fiscal policy remain hurdles to a pickup in employment.
The report “is consistent with a labor market that is gradually getting better,” said Guy Berger, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut, who had predicted a decline in claims. “Layoffs are at a low level and don’t seem to be going anywhere. Hiring is still very muted.”
Last week’s decline in claims may be short-lived. Before adjusting the data for seasonal variations, claims typically surge at the start of a quarter as people receiving benefits reapply in order for the government to recertify their applications, the Labor Department spokesman said.
The unadjusted increase in claims last week was smaller than projected because one large state showed a drop rather than an increase, said the spokesman, who declined to name the state. The breakdown by state will show up in next week’s report.
Economists Daniel Silver at JPMorgan Chase & Co. in New York and Ted Wieseman at Morgan Stanley in New York were among those speculating that California may be the only state large enough to cause such swings.
California “provided all required” claims data on a “timely” basis to the Labor Department, Dan Stephens, a spokesman for California’s Employment Development Department, said in an e-mail to Bloomberg.
Stocks were little changed as a slump in Apple Inc. dragged down technology shares, erasing earlier gains on optimism over the drop in claims. The Standard & Poor’s 500 Index was at 1,432.84 at the close in New York, up less than 0.1 percent from yesterday. Ten-year Treasury yields were little changed at 1.67 percent.
The Bloomberg Consumer Comfort Index fell to minus 38.5 in the week ended Oct. 7 from minus 36.9 in the prior period, according to figures released today. The drop was within the gauge’s margin of error of 3 percentage points and ended a six-week upswing that was the longest since early 2006. The measure has been higher than minus 40, a level associated with recessions and their aftermath, for the last three weeks
Consumer confidence in the U.S. held near a three-month high last week, with more Americans saying it was a good time to make purchases even as they grew more pessimistic about the economy, another report today showed.
Elsewhere today, South Korea and Brazil cut interest rates as economies around the world shield themselves from the risk of a deeper slowdown driven by weakness in China and austerity measures in Europe.
The trade deficit in the U.S. widened in August as exports dropped for a second month, evidence of decreasing demand overseas, figures from the Commerce Department also showed today. The gap grew 4.1 percent to $44.2 billion from $42.5 billion in July.
“The U.S. economy is gradually feeling the impact from the global growth slowdown,” said Harm Bandholz, chief economist at UniCredit Group in New York, who forecast the deficit would widen to $44 billion. “In the third quarter, the weaker global economy will leave its mark.”
Exports decreased 1 percent in August to $181.3 billion, the lowest level since February, after declining 1.1 percent the prior month, according to the Commerce Department’s data. A drop in foreign demand for industrial supplies such as fuel oil and petroleum products, and a slump in sales of American soybeans precipitated the decrease, the report showed.
Imports fell 0.1 percent to $225.5 billion, also the weakest since February, from $225.7 billion in the prior month. Purchases of autos, clothing and aircraft from overseas dropped.
After eliminating the influence of prices to produce the numbers used to calculate gross domestic product, the trade deficit climbed to $48.4 billion from $47 billion. It averaged $47.7 billion so far in the third quarter, up from $46.9 in the previous three months, indicating trade will subtract from growth.
Economists at Morgan Stanley in New York were among those cutting growth estimates for last quarter following the trade report. Their tracking forecast dropped to a 1.5 percent annual rate from 2.1 percent.
The slackening world economy is weighing on sales at companies such as Caterpillar Inc., which cut its forecast for 2015 earnings after commodity producers reduced capital spending. The world’s biggest construction and mining equipment maker said profit will be $12 to $18 a share, compared with previous projections of $15 to $20.
Peoria, Illinois-based Caterpillar is forecasting moderate and “anemic” growth through 2015, Chairman and Chief Executive Officer Doug Oberhelman said Sept. 24 in a presentation to analysts at a conference in Las Vegas. Construction in emerging markets will probably show modest improvements, he said.
“We’ve seen a slowing in economic growth that was more than we expected,” he said. “We think ‘13 could look like 2012 in terms of worldwide economic growth.”
The International Monetary Fund on Oct. 9 cut forecasts for global growth to 3.3 percent this year, the slowest since the 2009 recession, and said there are “alarmingly high” risks of a steeper slowdown. The Washington-based lender projects the 17-country euro area economy will contract 0.4 percent in 2012, worse than its prior forecast, while the U.S. will expand 2.2 percent, faster than an earlier prediction.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Labor market news was mixed last month, according to the most recent data on employment from the Labor Department. The jobless rate dropped to 7.8 percent in September, the first reading below 8 percent since January 2009. On the other hand, payrolls expanded by 114,000, the least since June.
Brighter job prospects may help President Barack Obama as the November elections draw nearer. With economic issues central to the race, the 0.3 percentage-point drop in unemployment aids the president’s case against Republican challenger Mitt Romney.