Jobless Claims Hold Below 300,000 for Seventh Week
Applications for U.S. unemployment benefits held below 300,000 for the seventh straight week, pointing to a rebound in payrolls after hiring eased last month.
Jobless claims increased by 1,000 to 295,000 in the week ended April 18, a Labor Department report showed April 23. The median forecast of 55 economists surveyed by Bloomberg News called for 287,000. The figures correspond to the week the government surveys employers to calculate the monthly payroll data, indicating hiring probably firmed in April.
Muted firings are helping boost prospects of a healthy labor market even as employers slowed hiring in March amid weaker foreign demand, chillier temperatures and fallout from the West Coast port workers’ dispute. Projections for robust employment growth may keep Federal Reserve officials on course to raise the benchmark interest rate this year for the first time since 2006.
“Layoffs are close to historical lows,” said Brett Ryan, a U.S. economist at Deutsche Bank Securities Inc. in New York, who correctly projected the claims figure. “There’s no reason why companies shouldn’t be feeling better about the outlook.”
Estimates in the Bloomberg survey for jobless claims ranged from 280,000 to 305,000. The prior week’s reading was unrevised at 294,000.
While there was nothing unusual in the data, Puerto Rico initially sent an estimate for claims because of a local holiday, a Labor Department spokesman said as the report was released to the press. Though the estimate was used in calculating the national figures, the territory later submitted actual readings, and the difference would have had no impact on the national numbers, the spokesman said.
The four-week average of claims, a less-volatile measure than the weekly figure, climbed to 284,500 from 282,750 in the prior week. The comparable reading for the March payroll survey week was 305,250, signaling employment could have picked up.
The number of people continuing to receive jobless benefits rose by 50,000 to 2.33 million in the week ended April 11. The unemployment rate among people eligible for benefits held at 1.7%, where it has been since mid-March. These data are reported with a one-week lag.
Claims below the 300,000 level point to an improving employment picture.
“That’s consistent with payroll growth at about 250,000,” Ian Shepherdson, chief economist at Pantheon Macroeconomics Ltd. in Newcastle, United Kingdom, said in a research note. “Sustained sluggishness in payrolls with claims at their current level is very unlikely,” he wrote, adding that he is projecting a 275,000 increase in April employment.
Not all areas of the economy have been immune to firings. Oil field service provider Baker Hughes Inc. announced April 22 that it had reduced headcount by 10,500, or 17% of its workforce, in the first quarter. The Houston-based company previously had reported a cut of 7,000 positions as the drop in energy prices weighed on oil-related business.
A consistently low level of firings typically portends strength on the hiring side of the market. The March payrolls report, however, joined a spate of disappointing data that contributed to declines in the Bloomberg Economic Surprise Index, which reached its lowest level in six years April 17. Manufacturing, retail sales and housing construction also have dropped below economists’ projections in early 2015.
Employers added 126,000 workers in March for the lowest reading since December 2013. The gain was weaker than the most pessimistic forecast in the Bloomberg survey of 98 economists and ended a 12-month streak of increases of 200,000 or more.
Beyond severe weather and the fallout from the West Coast port workers’ dispute, the economy probably will show signs of healing. Gross domestic product will pick up to a 3.1% annualized pace in the second quarter after 1.4% in the first three months of the year, according to medians in a Bloomberg survey conducted April 3-8.
Consumers are showing they are more upbeat about the economic outlook, with the University of Michigan sentiment gauge rising in April to its second-highest level in more than eight years. Households saw brighter prospects for the economy, their current financial situations and the buying climate, signaling a pickup in consumer spending that weakened at the start of the year.
Projections for a faster growth rate in the second half of the year boost chances that Fed policymakers will make further preparations to tighten monetary policy. The officials meet April 28-29 in Washington to weigh when to raise the benchmark interest rate for the first time since 2006.
