Fewer Americans than forecast filed applications for unemployment benefits last week, showing companies are refraining from firing workers even as growth cools this quarter.
Jobless claims dropped by 12,000 to 334,000 in the week ended June 8 from 346,000 the prior period, the Labor Department reported today in Washington. The median forecast of 51 economists surveyed by Bloomberg called for 346,000. No states were estimated and there was nothing unusual in the data, a Labor Department spokesman said as the figures were released.
Fewer dismissals mean companies have pared staff about as much as they can, which puts employers in a position to add to headcounts should sales improve in the second half of the year. Payrolls rose more than forecast last month, even as automatic federal spending cuts, known as sequestration, and higher payroll taxes may be holding back the economic expansion.
“The downside risk from sequestration is proving much smaller than some had feared,” said Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado. “Just like we dodged the bullet with the payroll tax increase earlier in the year, we seem to have dodged the bullet with sequestration.”
Retail sales rose more than forecast in May, showing job gains and lower borrowing costs are encouraging consumers to spend, figures from the Commerce Department also showed today. The 0.6 percent increase in purchases was the biggest in three months and followed a 0.1 percent April gain.
Stock-index futures held earlier losses after the reports. The contract on the Standard & Poor’s 500 Index maturing this month fell 0.2 percent to 1,607.2 at 8:45 a.m. in New York amid speculation a strengthening economy may prompt the Federal Reserve to pare stimulus.
Economists’ claims estimates in the Bloomberg survey ranged from 335,000 to 360,000. Applications dropped to a five-year low of 327,000 in late April.
The four-week moving average, a less-volatile measure than the weekly figures, declined to 345,250 last week from 352,500.
The cost of goods imported into the U.S. unexpectedly dropped in May for a third consecutive month, reflecting broad-based declines, another Labor Department report showed today. The 0.6 percent decrease in the import-price index followed a 0.7 percent fall the prior month. The median forecast of 43 economists in a Bloomberg survey called for no change. Prices declined 1.9 percent over the past 12 months.
Excluding fuel, import costs fell 0.3 percent last month, and were down 1.1 percent from May 2012. That was the biggest year-over-year decrease since November 2009.
Europe and other global markets continue to struggle, limiting demand for commodities including oil. That combined with a rising dollar is restraining inflation. American companies facing overseas competition for manufactured goods have little ability to raise prices.
The import-price index is the first of three monthly price gauges from the Labor Department. Producer prices are due tomorrow and the consumer-price index on June 18.
Jobless claims, which track weekly firings, typically fall before job growth, measured by the monthly non-farm payrolls report, can accelerate. Employers in the U.S. added 175,000 jobs in May, more than the median forecast in a Bloomberg survey. Still, employment at federal agencies excluding the postal service showed a 9,400 decrease, and manufacturing payrolls shrank for a third month.
The number of people continuing to receive jobless benefits increased by 2,000 to 2.97 million in the week ended June 1. The continuing claims figure doesn’t include the number of Americans receiving extended benefits under federal programs.
The number of job seekers who have exhausted their traditional benefits and now are collecting emergency and extended aid decreased by about 57,000 to 1.7 million in the week ended May 25.
The unemployment rate among people eligible for benefits held at 2.3 percent in the week ended June 1, today’s report showed.
Thirty-five states and territories reported a decrease in claims, while 18 reported an increase. These data are reported with a one-week lag.
New Jersey-based Honeywell International Inc. (HON:US) is taking a wait-and-see approach, and Chief Executive Officer David Cote said in a May 29 presentation that restricting hiring has put the company in a better position.
“This is a better time to be cautious than to be bullish if you’re investing as a company or hiring,” said Cote, whose company makes cockpit controls, thermostats, automobile turbochargers and other manufactured goods. “While you want to believe and there is economic news that looks better, it’s still just not enough to say, OK, start putting people on.”
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