Jobless Claims Fall but Hover Near Year’s Highest Level

Thursday, 28 Jun 2012 08:33 AM

 

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The number of applications for unemployment benefits hovered last week near the highest level of the year, showing little improvement in the U.S. labor market.

Jobless claims decreased by 6,000 to 386,000 in the week ended June 23, in line with the median forecast of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington. The prior week’s reading was revised up to 392,000 from 387,000, matching an April figure as the steepest of 2012.

Concern about the fallout from the European debt crisis and the so-called fiscal cliff that will face the U.S. at the end of this year may prompt employers to keep payrolls lean. Federal Reserve policy makers last week expanded a program to replace short-term bonds with longer-term debt in a bid to spur growth and trim a jobless rate that’s exceeded 8 percent for 40 consecutive months.

“There’s a lot of uncertainty as to the strength of the economy and the outlook,” Sean Incremona, senior economist at 4Cast Inc. in New York, said before the report. “Businesses are reluctant to hire, there’s a lot of uncertainty just due to Europe in addition to the fiscal policy, which are the two headline woes.”

The world’s largest economy expanded 1.9 percent in the first quarter, the same as previously estimated, data from the Commerce Department also showed today.

Economists’ Estimates

The median forecast of 46 economists surveyed by Bloomberg News projected claims would come in at 385,000. Estimates ranged from 372,000 to 392,000.

Stock-index futures maintained losses after the figures, with the contract on the Standard & Poor’s 500 Index expiring in September falling 0.5 percent to 1,319.4 at 8:34 a.m. in New York.

The four-week moving average decreased to 386,750 from 387,500, which was the highest since the week ended Dec. 3.

Payrolls in May expanded by 69,000 workers, the slowest pace in a year, and have cooled each month since January. The jobless rate, which climbed to 8.2 percent in May, has been stuck above 8 percent since February 2009, the longest stretch of such elevated levels in the post-World War II era.

The employment report for June will be released on July 6.

Continuing Claims

The report showed the number of people continuing to receive jobless benefits fell by 15,000 to 3.3 million in the week ended June 16.

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 increased by about 60,400 to 2.71 million in the week ended June 9.

The unemployment rate among people eligible for benefits was at 2.6 percent for a 14th consecutive week, according to today’s report.

Thirty-seven states and territories reported a decrease in claims, while 16 reported an increase. 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.

Operation Twist

Fed officials last week said they’ll expand Operation Twist, a program to replace short-term bonds with longer-term debt, by $267 billion through the end of 2012. They left unchanged their view that economic conditions will probably warrant keeping interest rates “exceptionally low” at least through late 2014, and said they are “prepared to take further action as appropriate.”

Policy makers see 1.9 percent to 2.4 percent growth in 2012, down from their April forecast of 2.4 percent to 2.9 percent, according to Fed projections issued last week. They forecast the unemployment rate will end the year at 8 percent to 8.2 percent, up from April’s 7.8 percent to 8 percent estimate.

“Usually coming out of a recession, there’s pent-up demand to change jobs and people want to try new things, try new skills,” said Michael Durney, chief financial officer of New York-based Dice Holdings Inc., which provides hiring services to recruiters, consultants and businesses.

“But it stayed below and we think that that’s probably the result of the overall uneasiness about the economy,” Durney said at a June 19 conference.

© Copyright 2014 Bloomberg News. All rights reserved.

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