Fewer Americans applied for unemployment insurance payments last week, indicating limited progress in the labor market after a two-month slowdown in hiring.
First-time claims for jobless benefits fell by 12,000 to 377,000 in the week ended June 2 from a revised 389,000 the prior week that was higher than initially estimated, the Labor Department said today. The median estimate of 49 economists surveyed by Bloomberg News called for 378,000 claims. The number of people receiving extended payments plunged.
The claims figures may ease concern of further labor market weakness after a report last week showed employers in May added the fewest workers in a year. While sustained demand is encouraging companies to maintain headcounts, stronger sales may be required to prompt a pickup in hiring.
“It’s pretty clear claims are stabilizing,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, who forecast 375,000 claims. “It’s hard to make the case that there’s any upward tilt to growth,” so companies are being cautious, he said.
Estimates ranged from 367,000 to 390,000 after an initially reported 383,000 in the previous week, according to the Bloomberg survey.
Stock-index futures maintained gains after the figure and following an interest-rate cut by China. The contract on the Standard & Poor’s 500 Index expiring this month climbed 0.7 percent to 1,324.3 at 8:41 a.m. in New York.
The four-week moving average of claims, a less-volatile measure, climbed to 377,750, the highest in a month, from 376,000.
The number of people continuing to collect jobless benefits increased 34,000 in the week ended May 26 to 3.29 million. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments slumped by almost 105,000 in the week ended May 19 to 2.83 million.
California, Florida, Illinois and Texas were among eight states that no longer qualified for emergency benefits as of May 12, according to a National Employment Law Project study. From April 7 through May 12, about 370,000 Americans in 23 states stopped getting the assistance, which provide payments for as long as 99 weeks, the study said.
States and Territories
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 2.6 percent in the week ended May 26, today’s report showed. Thirty-seven states and territories reported an increase in claims, while one reported a decrease.
Initial jobless claims reflect weekly firings and tend to fall as job growth accelerates. The unemployment rate rose to 8.2 percent in May, while employers added 69,000 jobs, the fewest in a year, after 77,000 in April. The unemployment rate has been above 8 percent since February 2009, the longest such stretch since monthly records began in 1948.
Supervalu Inc. (SVU:US), the third-largest U.S. grocery store chain, plans to eliminate as many as 2,500 positions at its Albertsons unit. The reductions, which will occur across all 247 Albertsons stores in California and Nevada, will begin the week of June 17 and should be completed near July 1, according to a statement yesterday. Albertsons is the biggest retail chain in Supervalu’s family of grocery stores. As of February, the company had about 130,000 employees, according to regulatory filings.
The Federal Reserve said yesterday in its Beige Book assessment of the economy that hiring was “steady or showed a modest increase” from early April to late May. The report gives central bankers anecdotal evidence on the health of the economy two weeks before they meet in Washington.
The Fed is debating whether to step up accommodation after May’s payroll report. Chicago Fed President Charles Evans said in a June 4 speech that “soft” U.S. economic data call for “extremely strong accommodation,” while Richard Fisher of Dallas said more Fed bond purchases would be “pushing on a string.” Chairman Ben Bernanke is scheduled to testify to Congress later today.
So far, consumer spending is holding up, said Lawrence Peiros, chief operating officer of Clorox Co. (CLX:US) in Oakland, California, which markets consumer products under brands including Burts Bees, Kingsford charcoal, Liquid-Plumr.
“The economy is starting to recover and we’re actually seeing the first signs of some positive growth,” Peiros said in a May 31 analyst meeting. “Our categories are starting to get a bit healthier as we get out of the recession, as the economy recovers and consumers get back to buying products.”
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