Jobless Claims Fall in Sign U.S. Job Market Mending: Economy
Jobless claims unexpectedly dropped by 6,000 to 361,000 in the week ended Aug. 4, Labor Department figures showed today in Washington. The median forecast of 43 economists surveyed by Bloomberg News called for an increase to 370,000. Other reports showed consumer confidence dropped to a two-month low and home prices climbed by the most since 2006.
The decrease in firings indicates the job market continues to mend after payrolls rose last month by the most since February. The world’s largest economy needs bigger gains in employment to prevent the lingering European debt crisis and approaching U.S. fiscal cliff from derailing the economic expansion.
“There’s a gradual improvement on the layoffs side,” said Peter Newland, an economist in New York for Barclays Plc, who projected claims would drop to 360,000. There will be “a bit of a rebound in the second half. It’s not going to be spectacular, but it should be better than the first half.”
Most stocks rose, giving the Standard & Poor’s 500 Index its longest rally since March. The S&P 500 advanced less than 0.1 percent to 1,402.8 at the close in New York.
The economic slowdown in Europe curtailed Britain’s exports in the second quarter, producing a record trade deficit, other data today showed.
Elsewhere, China’s inflation and industrial production growth cooled in July, and central banks in Japan and South Korea saw little sign of price pressures, underscoring the scope for monetary stimulus should the European crisis deepen.
U.S. jobless claims estimates in the Bloomberg survey ranged from 359,000 to 385,000. The Labor Department revised the previous week’s figure up to 367,000 from an initially reported 365,000.
A Labor Department spokesman said last week that today’s data should be clear of any influence from the annual auto plant retooling closures that make it difficult to adjust the data for seasonal variations. That would make it a truer reading of underlying labor market conditions.
The employment report for July issued last week showed 163,000 workers were added to payrolls last month following a 64,000 increase in June.
Rising gasoline prices may be preventing Americans from getting a lift from the improvement in hiring.
The Bloomberg Consumer Comfort Index dropped to minus 41.9 in the week ended Aug. 5 from minus 39.7 as Americans became more discouraged about the economy. The gauge hasn’t climbed since the end of June. Americans’ view of the economy fell to the lowest level since February.
“The American public is downright sour on their own economic prospects and those of the nation as a whole,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
Nonetheless, there are signs that housing, the industry that triggered the worst recession in the post-World War II era, is stabilizing.
The median sales price for single-family homes was $181,500 in the second quarter, up 7.3 percent from the same period last year, the strongest annual increase since the first quarter of 2006, according to a report today from the National Association of Realtors. Values increased in 110 of 147 metropolitan areas measured from the same time last year, compared with 74 in the first quarter.
Another report today showed the trade deficit in the U.S. shrank in June as imports dropped and exports climbed. The gap narrowed 11 percent to $42.9 billion, the smallest since December 2010, Commerce Department figures showed. Exports rose to a record on demand for autos and industrial engines.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
“We’re about two times where we were last year in terms of hiring happening through the LinkedIn products within our customers,” Chief Financial Officer Steven Sordello said on an Aug. 2 earnings call. “Given European weakness where job growth has been slower, that rate is even higher.”
Cisco Systems Inc. (CSCO) is among companies announcing job cuts. The biggest maker of computer-networking equipment plans to eliminate about 1,300 jobs, or 2 percent of the workforce, as Europe’s debt crisis and sluggish corporate spending threaten sales.
Last week’s jobs report also showed the unemployment rate climbed to a five-month high of 8.3 percent in July. Joblessness has been above 8 percent since February 2009 -- the longest stretch in the post-World War II era.
Fed officials, at the conclusion of a two-day meeting last week, left unchanged their statement that economic conditions would likely warrant holding the benchmark interest rate target near zero at least through late 2014.
The Federal Open Market Committee “will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability,” it said in a statement. The group “expects economic growth to remain moderate over coming quarters and then to pick up very gradually.”
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