More Americans than forecast filled applications for unemployment benefits last week, signaling the labor market is struggling to pick up.
Jobless claims fell by 6,000 to 422,000 in the week ended May 28, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected a drop in claims to 417,000, according to the median forecast. The number of people on unemployment benefit rolls and those receiving extended payments decreased.
Some employers may be paring their workforce to rein in labor costs at a time energy prices remain elevated, adding to concern that job creation is slowing. Economists in a Bloomberg News survey project a report tomorrow may show payroll gains weakened in May, raising the risk that consumers curb spending, the biggest part of the economy.
“The labor market is a little less robust than it was,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “This is the eighth consecutive week of claims above 400,000, so it doesn’t look like the move up was an aberration.”
Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing this month rose 0.2 percent to 1,314.6 at 8:44 a.m. in New York.
The median forecast was based on a survey of 50 economists. Estimates ranged from 400,000 to 440,000. The Labor Department revised the prior week’s figure up to 428,000 from the 424,000 initially reported.
There were no special events affecting the claims data last week, a Labor Department spokesman said as the figures were released to the press. The number of applications in three states — Hawaii, Oklahoma and Virginia — and in the Virgin Islands were estimated last week due to the shortened workweek because of the Memorial Day holiday, the spokesman said.
Missouri, where tornadoes devastated the town of Joplin, said severe weather was one of several reasons claims rose in that state last week, the Labor Department spokesman said. The increase was not unusually large, he said.
Another Labor Department report today showed worker productivity slowed in the first quarter and labor costs rose. The measure of employee output per hour increased at a revised 1.8 percent annual rate after a 2.9 percent gain in the prior three months. Employee expenses climbed at a 0.7 percent rate after dropping 2.8 percent the prior quarter.
Payrolls grew by 170,000 workers last month after increasing by 244,000 in April, Labor Department data may show tomorrow according to the median forecast of economists surveyed by Bloomberg. The jobless rate dropped to 8.9 percent from 9 percent, according to the survey.
Economists at Goldman Sachs Group Inc. and Deutsche Bank Securities were among those cutting payroll forecasts yesterday after a report from ADP Employer Services showed companies added 38,000 workers last month, the fewest since September and less than the median estimate in a Bloomberg survey.
Today’s data showed the four-week moving average, a less volatile measure than the weekly figures, fell to 425,500 last week from 439,500.
The number of people continuing to receive jobless benefits dropped by 1,000 in the week ended May 21 to 3.71 million.
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 decreased by about 4,900 to 4.04 million in the week ended May 14.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3 percent, today’s report showed.
Thirty-four states and territories reported an increase in claims, while 19 reported a decrease. 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.
Some companies are still paring their workforce. Bank of America Corp. (BAC), the largest U.S. bank by assets, will cut staff in its mortgage-sales unit in the next few months because volume is declining.
Mortgage headcount costs will “flatten out” over time, Chief Executive Officer Brian T. Moynihan said yesterday at a Sanford C. Bernstein & Co. conference in New York.
Home prices in 20 U.S. cities dropped in March to the lowest level since 2003, according to the S&P/Case-Shiller index, indicating housing remains mired in a slump almost two years into the economic recovery. Manufacturing, the driver of the expansion, also is cooling, the Institute for Supply Management’s factory report showed this week.
Other data indicate layoffs are waning. Planned firings dropped 4.3 percent to 37,135 last month from May 2010, figures from Chicago-based Challenger, Gray & Christmas Inc. showed yesterday. Government and nonprofit agencies had the most cutbacks.
The lack of bigger job gains and an economy that’s slowing reinforce the decision of Federal Reserve policy makers to keep interest rates close to zero for an extended period.
Federal Reserve Bank of Cleveland President Sandra Pianalto yesterday said in a speech she expects the economy “to continue on a gradual recovery pace over the next few years.”
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