Jobless Claims Decline to Lowest Level in Two Months
Initial jobless claims in the United States declined last week to the lowest level in two months, highlighting a resilient labor market.
Applications for unemployment benefits decreased by 11,000 to 264,000 in the week ended Sept. 12, a Labor Department report showed Sept. 17. The survey period included the Labor Day holiday. The median forecast of economists surveyed by Bloomberg News projected claims would hold at 275,000.
Employers are holding back on dismissals as the economy forges ahead against the headwinds of slowing global markets. Greater opportunities in the labor market will help give consumers the incomes and job security needed to maintain spending levels, which Federal Reserve officials are monitoring as they consider their first interest-rate increase in almost a decade.
The decline “is more good news for the American consumer because it shows their confidence in labor market improvement is well-placed,” said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. Price is the second-best forecaster of claims over the past two years, according to data compiled by Bloomberg. “Despite all the noise in the economy today, we are continuing to make good progress on the employment front.”
Claims last week were the lowest since the period ended July 18. Estimates from 47 economists in the Bloomberg survey ranged from 265,000 to 290,000.
The four-week average of claims, a less-volatile measure than the weekly figure, dropped to 272,500 from 275,750 the week before.
Another report Sept. 17 showed housing starts fell in August, indicating the real estate recovery will take time to evolve. New construction dropped 3% to a 1.13 million annualized rate, according to the Commerce Department report.
The number of people continuing to receive jobless benefits declined by 26,000 to 2.24 million in the week ended Sept. 5.
In that same period, the unemployment rate among people eligible for benefits held at 1.7% the prior week, the report showed.
Fed officials are using labor-market indicators like jobless claims to help gauge the health of the economy as they consider increasing their benchmark interest rate for the first time since 2006. Their decision will be announced at the conclusion of a two-day meeting Sept. 17.
Initial jobless claims reflect weekly firings and typically decrease before job growth can accelerate. Many layoffs now reflect company- or industry-specific causes, such as cost-cutting or business restructuring.
For instance, Hewlett-Packard Co. said this week that it will cut its payroll by as many as 33,300 jobs, incurring a charge of about $2.7 billion as part of the restructuring. It also is shifting employees to low-cost areas and hopes to have 60% of its workers located in cheaper countries by 2018.
