U.S. Initial Jobless Claims Unexpectedly Decline (Update1)
By Courtney Schlisserman
May 22 (Bloomberg) -- Fewer Americans than forecast applied for unemployment benefits last week, indicating companies are reluctant to fire more workers even as the economy slows.
First-time jobless claims fell 9,000 to 365,000, from a revised 374,000 the prior week, the Labor Department said today in Washington. The total number of people collecting benefits was unchanged at a four-year high of 3.073 million for the week ended May 10.
The figures signal that companies are responding to the current economic slowdown by cutting back on hiring rather than letting go of more staff, in contrast to previous downturns. Treasuries, which had fallen before the report, extended their declines after the figures.
``It does give a little bit of space to breathe,'' Beth Ann Bovino, a senior economist at Standard & Poor's in an interview with Bloomberg Television in New York. Still, continuing claims are ``still climbing and that's a little bit scary, meaning that people who don't have a job can't find one.''
Benchmark 10-year note yields climbed to 3.88 percent at 8:44 a.m. in New York, from 3.81 percent late yesterday.
Economists forecast claims would rise to 373,000, from a previously reported 371,000 a week earlier, according to the median of 38 projections in a Bloomberg News survey. Estimates ranged from 360,000 to 380,000.
Four-Week Average
The four-week moving average for initial claims, a less volatile measure, rose to 372,250 from 367,250.
The unemployment rate among people eligible for benefits, which tends to track the U.S. jobless rate, was unchanged at 2.3 percent. Thirty-one states and territories reported a decrease in new claims, while 22 had an increase. These data are reported with a one-week lag.
Federal Reserve policy makers yesterday raised their projections for the unemployment rate and reduced their outlook for growth, a central bank report showed yesterday.
Weekly claims have averaged 357,300 so far this year, compared with an average of 321,000 in 2007, when the economy generated 91,000 new jobs each month on average.
Last week's claims correspond to the week the government surveys businesses to calculate the monthly payroll report. The Labor Department's figures for May employment are due on June 6. The U.S. has lost jobs every month this year so far, including a 20,000 drop in April.
Fed Outlook
Federal Reserve policy makers last month projected the unemployment rate will rise more than they previously anticipated, heightening concern consumer spending will falter, according to minutes of the April meeting issued yesterday.
Central bankers forecast the jobless rate would average 5.5 percent to 5.7 percent in the last three months of the year, up from a January estimate of 5.2 percent to 5.3 percent. Figures from the Labor Department showed the unemployment rate dropped to 5 percent in April.
``The restraint on spending emanating from weakness in labor markets was expected to increase over coming quarters, with participants projecting the unemployment rate to pick up further this year and to remain elevated in 2009,'' the minutes said.
Spending last quarter rose at a 1 percent annual pace, the smallest gain since the 2001 recession. The economy expanded at a 0.6 percent annual rate from January through March and the growth rate for the six months through March was also the lowest since the contraction seven years ago.
Financial services firms have been among the worst hit in recent months as credit markets shrank amid an increase in defaults on mortgages.
Job Cuts
McGraw-Hill Cos., the owner of Standard & Poor's, said May 20 it plans to cut 395 positions in its financial services and education divisions, equaling 2 percent of the company's total workforce. About two-thirds of the reduction, or 246 jobs, will be in the unit that includes S&P.
``We are taking actions to further streamline our operations and lower our costs in the areas most affected by current market challenges,'' Chief Executive Officer Terry McGraw said in the statement. The company already cut 611 jobs, in the fourth quarter of last year.
Soaring fuel costs are also causing some businesses to retrench. AMR Corp.'s American Airlines, the world's largest carrier, said yesterday it will eliminate ``thousands'' of jobs as it drops U.S. routes and retires as many as 85 jets to blunt surging fuel prices and slowing demand.
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