First-time claims for jobless benefits rose last week from an almost three-year low, highlighting the uneven nature of the improvement in the U.S. labor market.
Applications for first-time unemployment benefits increased by 26,000 to 397,000 in the week ended March 5, Labor Department figures showed today. Economists forecast claims would climb to 376,000, according to the median estimate in a Bloomberg News survey. The total number of people receiving benefits in the prior week fell to the lowest since October 2008.
The rebound in the world’s largest economy has curbed firings, paving the way for employers such as Boeing Co. (BA) and Home Depot Inc. (HD) to add jobs and spur household spending. A Labor Department official said claims generally rise the week after a federal holiday and some New England states reported more claims due to school holidays.
“It’s the volatility around the Presidents’ Day holiday,” Jonathan Basile, director of U.S. economics at Credit Suisse Holdings USA Inc. in New York said before the report. “The swings around this moving holiday sometimes distort the trend. The labor market has been improving. Firms feel better about the outlook because their sales have improved and the need to cut costs” has decreased. The Presidents’ Day holiday was Feb. 21.
Bloomberg Survey
Jobless claims estimates in the Bloomberg survey of 49 economists ranged from 355,000 to 410,000. The Labor Department initially reported the prior week’s figures at 368,000.
The number of people continuing to collect jobless benefits decreased by 20,000 in the week ended Feb. 26 to 3.77 million.
Figures for continuing claims do not include the number of workers receiving extended and emergency benefits under federal and state programs.
Those who’ve used up their benefits and are now collecting emergency and extended payments decreased by about 200,500 to 4.3 million in the week ended Feb. 19.
The unemployment rate among those eligible for benefits, which tends to track the national jobless rate, remained unchanged at 3.0 percent.
Labor Market
Twelve states and territories reported an increase in claims during the week ended Feb. 26, while 41 had a decrease.
Recent reports add to evidence the labor market is on the mend. The jobless rate fell in February to 8.9 percent, the lowest since April 2009 and the third straight monthly decline, Labor Department figures showed last week. More seasonable weather helped boost payrolls by 192,000, the most since May.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
“We believe that we are in a continued positive economic recovery that will lead to positive labor growth over the course of the next couple of years,” Carl Camden, chief executive officer at Troy, Michigan-based temporary staffing provider Kelly Services Inc., said Feb. 24 at a conference in Boston. “We see strength in U.S. conditions.”
Companies taking on staff include Atlanta-based Home Depot. The world’s largest home improvement retailer in February said it is hiring more than 60,000 temporary workers in the U.S., and adding permanent employees for the second year in a row.
Boeing began “change incorporation” work on the 787 Dreamliner in San Antonio, Texas, where 450 employees will be hired on a temporary basis to join with 1,700 experienced workers at the site to complete the work, the Chicago-based planemaker said on March 7.
Near Zero
Federal Reserve policy makers will likely keep interest rates near zero and maintain plans to buy $600 billion in Treasury securities by June to boost growth as they await signs of sustained job creation. Fed Chairman Ben S. Bernanke said employment data are encouraging.
“We do see some grounds for optimism about the job market over the next few quarters,” Bernanke said March 1 during testimony before lawmakers. Still, the labor market “has improved only slowly,” and it may take “several years” for the unemployment rate to reach a “more normal level,” he said.
While higher fuel costs may be of concern for consumers, bigger paychecks thanks to the tax compromise reached by President Barack Obama and congressional Republicans in December are probably preventing demand from slipping for now.
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