An improving job market is doing wonders for U.S. consumer confidence.
The number of workers filing claims for jobless benefits fell by a more-than-projected 21,000 to 283,000 in the week ended Feb. 14, according to Labor Department data issued Thursday in Washington. Another report showed households are more upbeat in February about the economic outlook than at any time in the past four years.
Americans have become more optimistic in recent months as fuel prices plunged, firings abated and payroll gains accelerated, making it more likely spending will strengthen. Consumers will need to remain engaged to help the world’s largest economy overcome a slowdown in manufacturing, which is being held back by a rising dollar and sluggish growth overseas.
“The labor market is improving,” said Raymond Stone, managing director at Stone & McCarthy Research Associates in Princeton, New Jersey, who projected claims would fall to 285,000. “It should be a positive for both consumer confidence and consumer spending.”
The Standard & Poor’s 500 closed at 2,097.45 in New York, barely budging from record levels. The benchmark index has closed within four points of 2,100 for four consecutive days, reaching its highest level of 2,100.34 on Feb. 17.
The Bloomberg Consumer Comfort Index’s monthly economic expectations gauge rose by 1 point to 54 in February, the highest since January 2011. The weekly index was at 44.6 in the period ended Feb. 15 compared with 44.3 the previous week, according to Thursday’s report.
The improvement in the monthly outlook is “a positive sign regardless of a stall in views of current economic conditions,” said Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg.
Some 26 percent of Americans surveyed this month said the economy is getting worse, the least since January 2011. Thirty-five percent said it’s getting better.
More employment opportunities are helping quell pessimism as payrolls in January capped their best three months of growth in 17 years.
Initial jobless claims reflect weekly firings and a sustained low level of applications has typically coincided with faster job gains.
The figures correspond to the week the government surveys employers to calculate the monthly payroll data. Claims at current levels are usually associated with payroll increases of around 250,000 a month, Stone said.
The four-week moving average, a less volatile measure than the weekly figures, dropped to 283,250 last week, a three-month low, from 289,750. It’s down from 307,000 in the comparable January survey period. Payroll gains averaged 336,000 over the past three months, the most over comparable periods since November 1997.
There is also no sign yet that employment in the oil patch is starting to suffer from the plunge in fuel costs.
None of the states that reported an increase in claims in the week ended Feb. 7, when applications jumped to 304,000, said that mining or drilling companies were among those firing more workers. Texas, which showed an increase of 2,437, had no comment.
The median forecast of 50 economists surveyed by Bloomberg projected claims would fall to 290,000. Estimates ranged from claims of 270,000 to 320,000.
Cheaper gasoline costs are important to lower-income households, who tend to spend a greater share of their earnings on fuel than their wealthier counterparts.
The weekly Bloomberg consumer comfort measure rose in five of seven income brackets. Attitudes for those making $25,000 to $40,000 were the most positive since December 2007.
Another report Thursday showed the index of U.S. leading indicators rose at a slower pace in January, restrained by declines in building permits and factory orders that signal a cooler pace of growth.
The Conference Board’s index, a measure of the outlook for the next three to six months, climbed 0.2 percent last month, after a revised 0.4 percent gain in December that was smaller than initially reported, according to the New York-based group.
A slowdown in manufacturing and an uneven housing recovery are restraining the world’s largest economy at the start of 2015. That’s bearing out Federal Reserve concerns and explains why many officials last month said they were willing to leave interest rates low.
Many policy makers “indicated that their assessment of the balance of risks associated with the timing of the beginning of policy normalization had inclined them toward keeping the federal funds rate at its effective lower bound for a longer time,” according to minutes of the Jan. 27-28 Federal Open Market Committee meeting released on Wednesday in Washington.
“The Fed is probably a lot more concerned about the pace of growth down the line,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. “You’ve got some impact from the weakness in Europe. The lower gas prices are a net positive, so it’s a bit more of a mixed bag.”