Americans Grow More Upbeat as Job-Market Strength PersistsShobhana Chandra and Nina Glinski
Lines at state employment agencies last week were about as short as they’ve been in 15 years, adding to evidence of persistent labor-market strength that’s boosting Americans’ spirits.
Applications for unemployment benefits dropped by 20,000 to 268,000 in the seven days ended March 28, the second-lowest since April 2000, Labor Department figures showed Thursday in Washington. Bloomberg’s Consumer Comfort Index advanced a third straight week, approaching the highest reading since July 2007.
Jobless claims that have declined since the end of February indicate employers remain upbeat about the economy’s prospects after a recent slowdown in sales. A report Friday may show almost a quarter million jobs were added last month, helping explain why households are feeling better about their finances and laying the groundwork for a rebound in spending.
“One element of the economy that isn’t reflecting the weakness seen elsewhere is the job market,” said Tom Simons, an economist at Jefferies LLC in in New York, who projected 270,000 claims. “It indicates consumers will have more purchasing power and thus should be able to increase consumption.”
The Bloomberg index of sentiment climbed to 46.2 in the period ended March 29 from 45.5 the prior week, capping the strongest quarter since the second quarter of 2007. Among the gauge’s three components, the measure of the buying climate increased to the highest level in eight years. The reading on personal finances was the second-best since October 2007.
Stocks advanced, after a two-day decline, before the government’s monthly jobs data. The Standard & Poor’s 500 Index rose 0.4 percent to 2,066.96 at the close in New York.
Payrolls rose by 245,000 workers in March after climbing by 295,000 the prior month, according to the median projection in a Bloomberg survey before the Friday figures from the Labor Department. The unemployment rate probably held at 5.5 percent, the lowest since 2008.
Initial jobless claims reflect weekly firings and a sustained low level of applications has typically coincided with faster job gains. In an environment of accelerating employment growth, many weekly layoffs also may reflect company- or industry-specific causes, such as cost-cutting or business restructuring, rather than underlying labor market trends.
The median forecast of 46 economists surveyed by Bloomberg called for 286,000 claims last week. Estimates ranged from 270,000 to 310,000.
The four-week average for jobless claims, a less volatile measure than the weekly numbers, dropped to 285,500 last week, from 300,250.
“The claims numbers simply do not support the idea that the first-quarter slowdown in growth is indicative of some underlying malaise in the economy,” Ian Shepherdson, chief economist at Pantheon Macroeconomics Ltd, wrote in an e-mail to clients.
Figures on consumer spending were among recent data that showed the economy hit a soft patch earlier this year. Purchases barely rose in February as harsh winter weather kept households away from malls and automobile dealerships.
Weather subtracted 0.5 percentage point from first-quarter growth, according to the median estimate in a Bloomberg survey of 37 economists conducted from March 30 to April 1. Gross domestic product probably expanded at a 1.5 percent annualized rate in the first three months of the year, which would be the weakest in a year, the poll showed.
A report Wednesday showed manufacturing expanded in March at the slowest pace in almost two years, restrained by a stronger dollar, weaker foreign demand, a plunge in oil prices and lingering delays in shipments from West Coast ports.
The U.S. trade deficit shrank in February to the lowest level in more than five years as the port labor dispute contributed to the weakest reading on purchases from abroad since April 2011, a Commerce Department report showed Thursday. The gap, which measures the difference in value between imports and exports, narrowed 16.9 percent to $35.4 billion.
The logjam of ships waiting to unload foreign-made goods at the ports will soon dissipate as the worker dispute has been resolved, which means imports will probably again flood into the U.S. At the same time, a strong dollar, which makes American-made goods more expensive to customers overseas, signals exports will remain muted, causing the deficit to swell.
“The surprise is mostly due to the West Coast ports disruptions, and it’s temporary,” said Thomas Costerg, an economist at Standard Chartered Bank in New York, who projected the gap would narrow to $38.5 billion, among the lowest in the Bloomberg survey. “Looking ahead, the trade deficit should widen again.”