(Updates with markets in fifth paragraph.)
Dec. 8 (Bloomberg) -- Fewer Americans than forecast filed applications for unemployment benefits last week, reflecting a pullback following the Thanksgiving holiday and fewer seasonal firings which may signal the labor market is on the mend.
Jobless claims dropped by 23,000 to 381,000 in the week ended Dec. 3, the fewest since February, Labor Department figures showed today in Washington. The median forecast of 47 economists in a Bloomberg News survey called for a drop to 395,000. The number of people on unemployment benefit rolls and those getting extended payments also decreased.
Companies are firing fewer workers yet may be reluctant to ramp up staff until demand picks up and there’s more clarity on tax breaks due to expire at year-end. While the jobless rate last month unexpectedly fell to 8.6 percent, the lowest in more than two years, faster job growth is needed to push the rate lower and spur consumer spending.
“We are likely to see modest growth in hiring in coming months,” Stephen Stanley, chief economist for Pierpont Securities LLC in Stamford, Connecticut, said before the report. “That’s why we’ll see a gentle acceleration in jobs. Businesses won’t let loose on hiring until they see robust growth in consumer spending.”
Stock-index futures jumped after the report as European Central Bank President Mario Draghi said policy makers will adopt additional non-standard measures to fight the debt crisis. The contract on the Standard & Poor’s 500 Index maturing this month climbed 0.5 percent to 1,270.5 at 8:39 a.m. in New York. Treasury securities fell, pushing the yield on the benchmark 10- year up to 2.09 percent from 2.03 percent late yesterday.
Jobless benefits applications were projected to decrease from 402,000 initially reported for the prior week, according to the survey median. Estimates ranged from 375,000 to 410,000. The Labor Department revised the prior week’s figure, which included the Thanksgiving Day holiday, up to 404,000.
A Labor Department spokesman said there was nothing unusual in the state level data last week. The seasonal-adjustment factors projected claims would jump by about 182,000, the biggest upward adjustment for the year, representing a rebound from the shortened, Thanksgiving holiday workweek. Instead they climbed by about 151,000, pushing down the adjusted reading, the spokesman said. It’s often difficult to account for the effect of holidays on weekly claims.
The decrease may also reflect fewer year-end seasonal dismissals, the spokesman said.
Today’s data showed the four-week moving average, a less volatile measure than the weekly figures, dropped to 393,250 last week from 396,250.
The number of people continuing to receive jobless benefits dropped by 174,000 in the week ended Nov. 26 to 3.58 million, the fewest since September 2008.
The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 211,600 to 3.31 million in the week ended Nov. 19.
Financial institutions are accelerating job cuts amid fears a European default may trigger a crisis and a global slowdown.
Citigroup Inc., the third largest U.S. bank by assets, will cut about 4,500 jobs in coming quarters to trim costs amid slumping revenue, Chief Executive Officer Vikram Pandit told an investors’ conference this week. Citigroup employed about 267,000 people at the end of the third quarter, according to a quarterly filing.
The bank said in September it would limit hiring only to “critical” jobs to control costs and boost revenue as regulations on minimum capital levels take effect. Financial firms worldwide have cut more than 200,000 jobs this year, compared with about 58,000 last year and 174,000 in 2009, according to data compiled by Bloomberg.
The unemployment rate among people eligible for benefits decreased to 2.8 percent, the lowest level since October 2008, from 3 percent in the prior week, today’s report showed.
Fourteen states and territories reported an increase in claims, while 39 reported a drop. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Last month’s unexpected decline in the unemployment rate to 8.6 percent marks the third time since April 2009 that joblessness has fallen below 9 percent. Payrolls increased by 120,000, after a 100,000 gain in October that was larger than previously estimated.
President Barack Obama and congressional leaders are trying to put together a package of year-end tax and spending provisions that can be enacted, including an extension of the payroll tax cut and jobless benefits.
A final deal may not emerge until the week of Dec. 12, because the U.S. House of Representatives won’t vote on its plan until then. Senate leaders are focusing on a Dec. 9 vote on a Democratic proposal that Republicans already have rejected.
Many lawmakers agree that the 2 percentage-point cut in the payroll tax for employees, which expires Dec. 31, should be extended through 2012. They also agree that Congress should continue expanded unemployment benefits and prevent Medicare reimbursements from being cut in January. They disagree over how to offset the cost to the U.S. Treasury and on what other provisions should be added.
--With assistance from Chris Middleton in Washington. Editor: Carlos Torres
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