The number of Americans filing for unemployment insurance payments hovered last week near the lowest level in almost seven years, and consumer confidence improved, showing the world’s largest economy is speeding up.
Jobless claims increased by 2,000 to 304,000 in the week ended April 12 from a revised 302,000 the prior period that was the lowest since September 2007, a Labor Department report showed today in Washington. The Bloomberg Consumer Comfort (COMFCOMF) Index climbed from a nine-week low, reflecting more upbeat views on the economy, finances and buying climate.
Firings are on the decline as companies, already lean from recession-era job cutting, gear up for rising sales as the economy strengthens. Another report today showing manufacturing is improving adds to signs the economic expansion is broadening as the U.S. emerges from an unusually harsh winter.
“The labor market is getting better,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who forecast 305,000 claims. “You’re going to see it improve further as we go through the balance of the year.”
Stocks were little changed, after the best three-day rally in two months, as disappointing sales from Google Inc. and IBM offset earnings from Morgan Stanley and General Electric Co. The Standard & Poor’s 500 Index was up less than 0.1 percent to 1,863.12 at 10:38 a.m. in New York.
The median forecast of 47 economists surveyed by Bloomberg called for an increase to 315,000. Estimates ranged from 295,000 to 328,000. The prior week’s claims were revised up from an initial reading of 300,000.
The total number of people receiving benefits fell by 11,000 to 2.74 million in the week ended April 5, the fewest since December 2007, today’s report showed.
“Not only have you had a slowdown in layoffs, but also the total number of people on state benefit rolls has fallen,” said Jones. “You have had a pretty significant improvement.”
The Bloomberg index showed sentiment recovered broadly last week among most income groups, with consumers’ spirits lifted in part by warmer weather that’s helped lower home-heating bills. Employment opportunities that propel bigger wage gains will provide Americans the wherewithal to extend a recent pickup in spending, supporting the economy.
“Both the labor market and growth have stabilized, albeit at low levels, which has bolstered the confidence of Americans in their own individual personal finances and the state of the national economy,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Across the board in income levels, you saw broad improvement.”
The report also showed the monthly economic expectations gauge jumped 8 points to minus 4, the biggest gain since November. Some 27 percent of those surveyed said the economy was getting better.
The improvement in confidence follows a pickup in spending as Americans, bolstered by steady job growth and fewer firings, feel more secure about their financial situations. Retail sales jumped a more-than-forecast 1.1 percent in March following a 0.7 percent advance in February that was more than twice as large as previously reported, Commerce Department figures showed this week.
The increase was led by the biggest gain in motor-vehicle purchases since September 2012. Cars and light trucks sold in March at a 16.3 million annualized rate, the fastest since May 2007, following a 15.3 million pace the prior month, according to data from Ward’s Automotive Group.
The improvement in manufacturing isn’t confined to automakers. The Federal Reserve Bank of Philadelphia’s factory index increased to 16.6 in April, the highest level since September, from 9 the prior month, another report today showed. Readings greater than zero signal growth in the area covering eastern Pennsylvania, southern New Jersey and Delaware.
The gauge’s combined 22.9 point jump this month and last is the biggest since September-October 2011.
Further gains in the job market would help provide a bigger boost to confidence. Payrolls climbed by 192,000 workers in March after a 197,000 increase the previous month that was larger than first estimated, the Labor Department said earlier this month. Private payrolls, which exclude those at government agencies, exceeded the pre-recession peak for the first time.
Even with the improvement, Federal Reserve Chair Janet Yellen said yesterday that policy makers must be mindful of how short the U.S. still remains of achieving its goals of full employment and price stability.
In the first major speech on her policy framework as Fed chair, Yellen said central bankers must not yet be satisfied with the strides the world’s largest economy has made since the recession ended.
“The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained,” Yellen said to the Economic Club of New York.
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