Subscribe to INT Podcast
|October 23, 2017|
Jobless claims in U.S. unexpectedly fall to five-year low
The number of Americans filing claims for jobless benefits unexpectedly dropped last week, and the average over the past month fell to the lowest level since before the last recession, showing employers have enough confidence in the economic outlook to hold onto workers.
Applications for unemployment insurance payments decreased by 4,000 to 323,000 in the week ended May 4, the fewest since January 2008, Labor Department figures showed Thursday. The four-week average declined to 336,750, the lowest since November 2007, the month before the start of the worst economic slump since the Great Depression.
Fewer firings may be a harbinger of further labor-market gains that will help put more of the 11.7 million unemployed Americans back to work. Another report showed consumer sentiment last week held around the highest level in five years as more households said it was a good time to shop for needed goods and services.
“There is only so much companies can cut layoffs before they have to start thinking about adding to headcounts,” said Guy Berger, an economist at RBS Securities Inc. in Stamford,Connecticut, who projected claims would drop to 325,000 last week, the lowest forecast in the Bloomberg survey. “The longer this continues, the more likely companies will have to add to headcounts.”
Stocks fell, following five successive records for the Standard & Poor’s 500 Index, as investors weighed earnings results from Monster Beverage Corp. to News Corp. The S&P 500 dropped 0.2 percent to 1,628.67 at 12:25 p.m.in New York. Yesterday’s all-time closing high was 1,632.69.
Payrolls expanded by 165,000 workers last month following a 138,000 gain in March, the Labor Department reported on May 3. They rose by 236,500 a month on average from November through February.
Updated Labor Department estimates eased concern about the severity of the slowdown. Revisions added a total of 114,000 jobs to the tally in February and March. The unemployment rate also unexpectedly fell to a four-year low of 7.5 percent.
Federal Reserve Bank of Chicago President Charles Evans today said the labor market is “doing better” thanks to record policy stimulus, adding that he wants to see employment gains continue through the middle of the year.
“I’d like to have confidence that we can sustain that improvement in the labor market through the summer,” Evans said, speaking in an interview with Michael McKee on Bloomberg Television.
Evans reiterated Thursday that he’s looking for monthly job growth at the pace of at least 200,000 for six months.
Fuji Heavy Industries Ltd. (7270), the maker of Subaru cars, has signaled it believes the U.S. economy is strong enough to merit expanding business. The Tokyo-based carmaker said yesterday it will invest $400 million to boost U.S. capacity by the end of 2016 as demand for vehicles rises, and it will hire 900 people for its plant Lafayette, Indiana.
The median forecast of 48 economists surveyed by Bloomberg projected the number of jobless claims would rise to 335,000 last week. Estimates ranged from 325,000 to 365,000. The prior week’s applications were revised up to 327,000 from the initially reported 324,000.
The Bloomberg consumer comfort index shows that gains in sentiment over the past month have been driven by wealthier Americans who benefit the most from higher stock and home prices. Confidence for households earning more than $50,000 a year turned positive two weeks ago for the first time since November 2007.
That may be one reason why companies such as Whole Foods Market Inc. (WFMI), the largest natural-goods grocer in the U.S., are showing better results. The Austin, Texas-based retailer yesterday boosted its forecast for earnings this year as second-quarter profit climbed 20 percent and plans to triple its U.S. store count to about 1,000.
At the same time, the lagged effect of higher taxes is hurting the pocketbooks of those at the lower end of the income scale, one reason why it may be difficult for confidence to improve much more without bigger gains employment.
“Upper-income earners feel more comfortable about their finances,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Middle- and lower-wage earners are facing difficulty adjusting” to smaller paychecks, so “consumer spending will grow at a modest pace.”
Two of the three components of the comfort index declined last week. The gauge assessing Americans’ views on the current state of the economy fell to minus 57.8 from minus 57.2. The index measuring consumers’ views on their personal finances dropped to 0.8 from 3. Nineteen percent of survey respondents rated finances as poor, the biggest share in seven months. (Source: Bloomberg)
Story Date: May 10, 2013