U.S. Initial Jobless Claims Unexpectedly Fall to Lowest Level Since 2008
Initial jobless claims unexpectedly declined last week to the lowest level since May 2008, pointing to a strengthening labor market.
Applications for unemployment benefits decreased by 20,000 to 368,000 in the week ended Feb. 26, Labor Department figures showed today. Economists forecast claims would climb to 395,000, according to the median estimate in a Bloomberg News survey. The total number of people receiving unemployment insurance fell to the lowest level since October 2008.
Among the reasons for increased optimism about the labor market in coming months has been a recent drop in initial claims, Federal Reserve Chairman Ben S. Bernanke told lawmakers this week. Companies added 200,000 jobs in February, while unemployment rose to 9.1 percent, economists project a Labor Department report to show tomorrow.
“Claims are moving in the right direction,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets Corp. in New York. “The question is when this starts to translate into more meaningful job growth. It’s probably not that far away. In the second half you’ll see some acceleration” of job growth.
Jobless claims estimates in the Bloomberg survey of 47 economists ranged from 375,000 to 405,000. The Labor Department initially reported the prior week’s figures at 395,000. Initial claims have declined in four of the last five weeks.
Stock-index futures rose after the report and Treasuries fell. The contract on the Standard & Poor’s 500 Index gained 1.1 percent to 1,319.9 at 8:46 a.m. in New York. The yield on the benchmark 10-year note rose to 3.53 percent from 3.47 percent late yesterday.
The four-week moving average, a less volatile measure, dropped to 388,500, the lowest since the week ended July 12, 2008, from 401,250 last week. It was also the first time the monthly average has been below 400,000 since July 2008.
The number of people continuing to collect jobless benefits unexpectedly decreased by 59,000 in the week ended Feb. 19 to 3.77 million.
Economists forecast the number would increase to 3.82 million. Figures for continuing claims do not include the number of workers receiving extended benefits under federal programs.
Those who’ve used up their benefits and are now collecting emergency and extended payments increased by about 57,000 to 4.5 million in the week ended Feb. 12.
The unemployment rate among those eligible for benefits, which tends to track the national jobless rate, fell to 3 percent from 3.1 percent.
Forty-two states and territories reported a decrease in claims during the week ended Feb. 19, while 11 had an increase.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
“We do see some grounds for optimism about the job market over the next few quarters, including notable declines in the unemployment rate in December and January, a drop in new claims for unemployment insurance, and an improvement in firms’ hiring plans,” Bernanke told Congress this week.
So far, the labor market “has improved only slowly” and it may take “several years” for the unemployment rate to reach a “more normal level, Bernanke said.
Central bank policy makers will likely keep interest rates near zero and maintain plans to buy $600 billion in Treasury securities by June to boost the pace of recovery until they see signs of sustained job creation.
Payrolls increased a fewer-than-forecast 36,000 in January, depressed by snowstorms that kept some companies from hiring, the Labor Department reported Feb. 4.
“Overall, when we look at the job market we do believe that it is on track to improve,” Don Johnson, vice president of U.S. sales for General Motors Co. (GM), said on a teleconference this week. “February was quite simply another great month for General Motors.”
GM said vehicle deliveries last month increased 46 percent from February 2010.
Some companies are cutting workers. Minneapolis-based Medtronic Inc. (MDT) announced on Feb. 22 it will cut 1,500 to 2,000 jobs, or about 4 percent to 5 percent of its workforce, amid stagnating sales for implanted devices.
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