Fewer Americans than projected applied last week for unemployment benefits, showing companies are confident economic growth will rebound after winter weather depressed demand.
Jobless claims declined by 26,000 to 323,000 in the week ended March 1, the least since the end of November and fewer than any economist forecast in a Bloomberg survey, a Labor Department report showed today in Washington. Other data showed consumers’ views of the economy reached an almost seven-month high, according to Bloomberg’s weekly index of sentiment.
Falling dismissals set the stage for additional hiring, helping spur household confidence and giving Americans the wherewithal to boost spending. A report tomorrow may show the number of workers that companies added in February lagged behind last year’s average after a weather-induced slowdown in housing starts and retail sales.
“The overall trend here is positive and consistent with a gradually improving job market,” said Gennadiy Goldberg, a U.S. strategist at TD Securities USA LLC in New York. “We have stemmed the bleeding in layoffs. What remains is to add jobs.”
Companies took on 150,000 workers in February, based on the median estimate in a Bloomberg survey of economists before tomorrow’s monthly employment report, after a 142,000 increase a month earlier. Private payroll gains averaged almost 200,000 a month in 2013.
Including government agencies, employment is projected to climb by 149,000 after a 113,000 increase in January.
The Bloomberg Consumer Comfort Index improved to minus 28.5 in the week ended March 2, the second-strongest reading this year, from minus 28.6. A measure of views of current economic conditions advanced to minus 49, the highest since Aug. 11, while a gauge of the buying climate fell as Americans received higher home-heating bills and paid more at the gas pump.
Telling the Jobs Report Story
“Improvement in household sentiment, linked primarily to stabilization in the pace of firings, and modest growth point to a spring time rebound in overall economic activity once the polar vortex loosens its grip on many areas of the country,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “While a slowdown in spending, hiring and housing beyond simple weather effects remains a concern, the economy is likely not to slide back into stall speed this year.”
Stocks rose, sending the Standard & Poor’s 500 Index to an all-time high after the jobless claims figures. The S&P 500 climbed 0.2 percent to 1,877.03 at the close in New York.
In Europe, European Central Bank President Mario Draghi signaled that deflation risks are easing as the economy improves in the euro region. The ECB today kept its main interest rate at 0.25 percent and raised its forecast for 2014 growth to 1.2 percent from 1.1 percent.
Other data today in the U.S. showed colder temperatures and snowstorms were weighing on the economy. Factory orders in January dropped 0.7 percent, according to the Commerce Department. Shipments of non-military capital goods excluding aircraft, which are used to calculate gross domestic product, decreased 1 percent.
Another report from the Labor Department showed worker productivity rose less than previously calculated in the fourth quarter. Output per hour climbed at 1.8 percent annualized rate from October through December, less than the prior estimate of a 3.2 percent gain.
Labor costs tied to the gain in efficiency dropped at a 0.1 percent pace following a 2.1 percent decrease in the third quarter. For all of 2013, expenses climbed 1.1 percent, the smallest gain since 2010, when they dropped 1.2 percent.
Frigid temperatures and heavy snow in the Northeast and Midwest have restrained recent economic data. A report from the Commerce Department last month showed retail sales declined in January by the most since June 2012. Housing starts dropped 16 percent in January from the prior month, data on Feb. 19 showed.
A Labor Department spokesman said today that the recent fluctuation in jobless claims coincides with states most affected by winter storms. The median forecast of 51 economists surveyed by Bloomberg called for 336,000 applications last week. Estimates ranged from 325,000 to 350,000.
The claims data showed the four-week average, a less-volatile measure than the weekly figure, decreased to 336,500 from 338,500.
The number of people continuing to receive jobless benefits decreased by 8,000 to 2.91 million in the week ended Feb. 22, the fewest this year.
General Dynamics Corp., a Falls Church, Virginia-based defense company, is dismissing workers. The company will eliminate 1,195 call center positions in Houston, with most jobs ending by April 25, it said in a February letter to the Texas Workforce Commission.
Other companies are expanding to help them draw customers. ZipRealty Inc., an Emeryville, California-based residential real estate brokerage, is among them.
“We’re increasing our transaction capacity and production pipeline by hiring new agents in the cities we serve,” Lanny Baker, president and chief executive officer, said in a March 3 call. “Our growing agent ranks and lead volume gains in 2013 are expected to contribute the transaction volume this year.”
Federal Reserve policy makers are focusing on the job market to help guide the pace at which they’re reducing stimulus. The Federal Open Market Committee’s next meeting is March 18-19. The central bank will continue cutting monthly bond purchases by $10 billion per meeting, based on a Bloomberg survey of economists.
The Fed’s view on the economy could be complicated by weather distortions.
“What we need to do, and will be doing in the weeks ahead, is to try to get a firmer handle on exactly how much of that set of soft data can be explained by weather and what portion, if any, is due to a softer outlook,” Fed Chair Janet Yellen said while speaking to the Senate Banking Committee Feb. 27.
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