Applications for U.S. unemployment benefits unexpectedly declined last week to an almost four-month low, a sign companies are confident in the outlook for demand.
Jobless claims decreased by 10,000 to 311,000 in the period ended March 22, Labor Department data showed today in Washington. The median forecast of 49 economists surveyed by Bloomberg called for 323,000 claims. The four-week average of applications filed with state agencies dropped to the lowest level since September.
A slower pace of firings helps give employers room to add staff when sales pick up after harsher winter weather weighed on first-quarter growth. Federal Reserve policy makers are counting on sustained improvement in the job market as they wind down their unprecedented bond-buying program and consider when to raise interest rates.
“The underlying thrust in the labor market remains fairly favorable and the steadying pace in claims is essentially reflecting that,” Millan Mulraine, deputy head of U.S. research and strategy at TD Securities LLC in New York, said before the report. “One would think that as the spring thaw comes, that would start putting some life back into the labor market as it will for the rest of the economy.”
Estimates in the Bloomberg survey ranged from 295,000 to 335,000 after a previously reported 320,000 in the prior week.
Separate figures from the Commerce Department showed the U.S. economy expanded more than previously estimated in the final three months of 2013. Gross domestic product climbed at a 2.6 percent annualized rate in the fourth quarter, revised from 2.4 percent, reflecting in part more spending on health care.
Stock-index futures held earlier gains after the reports. The contract on the Standard & Poor’s 500 Index maturing in June rose 0.2 percent to 1,845.3 at 8:32 a.m. in New York.
The four-week average of claims, a less-volatile measure than the weekly figure, fell to 311,750, the lowest since Sept. 28, from 327,250 in the prior week.
The number of people continuing to receive jobless benefits dropped by 53,000 to 2.82 million in the week ended March 15, the lowest since Dec. 21. The unemployment rate among people eligible for benefits held at 2.2 percent in the same period.
Thirty-seven states and territories reported a decline in claims, while 16 reported an increase. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and typically wane before employment can accelerate. Data-storage equipment maker NetApp Inc. said it plans to cut 600 jobs, or 5 percent of its workforce, as declining demand from federal agencies weighs on its sales. The Sunnyvale, Calif.-based company reported the changes in a filing with the Securities and Exchange Commission.
Employers signaled a bit more optimism about the economy in February as they took on more workers. The 175,000 increase in payrolls was the biggest in three months. Hiring probably climbed by 190,000 in March, according to the survey median ahead of Labor Department data released April 4.
At the same time, faster job growth depends on stronger demand and a Bloomberg survey of economists earlier this month shows job gains will be on par with past years. Employment will increase 192,000 a month in 2014, according to the median projection. That compares with 194,250 last year and 186,330 in 2012.
The outlook for persistent job growth is one reason Fed officials have adhered to plans to make further cuts to stimulus this year. The central bank reduced its monthly pace of bond purchases by $10 billion, to $55 billion, according to a statement after the March 18-19 meeting.
The Fed also stopped linking the benchmark interest rate with a specific level of unemployment, saying its assessment of progress toward goals of maximum employment and 2 percent inflation will take into account a wide range of information, including labor market conditions.
Fed Chair Janet Yellen said in a news conference after the meeting that “virtually all” measures of unemployment she studies are showing improvement. Yellen has cited labor force participation, employment openings and the rate of workers quitting their jobs among the gauges she’s watching.
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