Claims for unemployment benefits
declined last week to the lowest level in a month, easing
concern that the U.S. labor market is faltering.
First-time claims dropped by 1,000 to 367,000 in the period
ended May 5, the Labor Department said today in Washington.
Other reports showed that a gauge of consumer confidence
declined to a three-month low, and the trade deficit widened on
rising demand for imports from oil to autos.
Claims are returning to levels reached in February and
March, indicating a surge last month probably reflected
difficulty in adjusting the data for an Easter holiday that came
earlier this year than last. Declines in dismissals point to a
brighter labor market that would help sustain consumer spending
after payroll growth slowed last month.
“The health of the labor market is improving,” said
Stuart Hoffman, chief economist at PNC Financial Services Group
Inc. in Pittsburgh. Hoffman is the most accurate forecaster of
payrolls in the two years ended in March, according to Bloomberg
data. “It gives me a little bit of encouragement that the May
employment report won’t be a third-strike-you’re-out type of
number.”
Stocks rose as Greece attempted to form a new government to
try and remain in the euro area. The Standard Poor’s 500 Index
climbed 0.3 percent to 1,358.54 at 11:18 a.m. in New York.
The median forecast of 47 economists surveyed by Bloomberg
News called for 368,000 applications last week. Estimates ranged
from 345,000 to 380,000. The Labor Department revised the
previous week from 365,000.
Since February
The latest week’s figure compares with an average of
373,000 claims since the end of February. Initial jobless claims
reflect weekly firings and tend to fall as job growth –
measured by the monthly non-farm payrolls report — accelerates.
American employers added fewer workers than forecast in
April and the jobless rate unexpectedly fell as people left the
labor force, the Labor Department said on May 4. Payrolls
climbed 115,000, the smallest gain in six months, after a
154,000 March increase.
At the same time, in markets where the employment has
improved, business is picking up.
“Although national job growth numbers have been uneven and
a bit disappointing over the past few months, we are seeing much
improved employment trends in many of our markets,” Allan Merrill, president and chief executive officer of Beazer Homes
USA Inc. (BZH) (BZH) in Atlanta, said in a May 2 earnings call.
Consumer Confidence
A rebound in job growth would help shore up consumer
confidence, which fell in the week ended May 6 to the lowest
level since early February. Consumer spending accounts for about
70 percent of the economy.
The Bloomberg Consumer Comfort Index declined to minus
40.4, a level associated with recessions or their aftermaths,
from minus 37.6 in the previous period. The gauge has declined
for three straight weeks and given back more than half its gain
from the end of 2011 through mid-April.
Two of the index’s three components declined. The gauge of
personal finances fell to minus 11.2, the weakest reading since
November, from minus 6.6. A measure of whether consumers
consider it a good or bad time to buy slipped to minus 45.8, a
three-month low. Americans’ views on the state of the economy
were little changed at minus 64.2.
The comfort index’s 9-point decline since April 15 also
marks the biggest three-week slide since March 2011. The gauge
reached a four-year high in the week ended April 15.
‘Economic Discontent’
Readings lower than minus 40 are correlated with “severe
economic discontent,” according to Gary Langer, president of
Langer Research Associates LLC in New York, which compiles the
index for Bloomberg. The gauge has averaged minus 15.3 since its
inception in December 1985.
“It’s clear that 2012 will present its share of
challenges,” Carl Camden, president and chief executive officer
of Kelly Services Inc., a staffing agency, said yesterday during
an earnings call. “To be certain, the U.S. economy is
recovering but at a stubbornly slow pace. Large companies still
aren’t spending and adding jobs as quickly as would’ve been
expected.”
Today’s Commerce Department figures on the trade deficit
pointed to strong domestic demand as U.S. consumers and
companies bought imported crude oil, computers, automobiles and
televisions.
The deficit widened 14 percent to $51.8 billion. The median
estimate of economists surveyed by Bloomberg called for an
increase to $50 billion. A 5.2 percent jump in imports, the
biggest in more than a year, swamped the 2.9 percent gain in
exports, which also reached a record.
Consumer Spending
The trade report “is an indication that consumer spending
has remained quite strong in March,” said Millan Mulraine, a
senior U.S. strategist at TD Securities in New York. “We should
see some of that positive momentum carry into the second
quarter.”
The pickup in the value of imports reflected higher fuel
prices and a bounce back in shipments from China following the
week-long Lunar New Year celebrations amid increasing consumer
spending. Sales by American companies to counterparts in Mexico,
the European Union and South Korea reached the highest ever,
giving no indication of a slowdown in global demand.
Imports from China climbed 12 percent in March after
plunging the prior month as the Lunar New Year holidays extended
into early February. The March trade gap with China widened to
$31.5 billion from $28.1 billion, today’s report showed.
During a trip to China last week Treasury Secretary Timothy F. Geithner hailed a strengthening in economic ties. There was
little evidence of tensions over exchange-rate policy, with
Geithner in his closing remarks calling Chinese moves toward a
more flexible currency “significant and promising” and likely
to lead to gains against the dollar and other major currencies.
To contact the reporters on this story:
Lorraine Woellert in Washington at
lwoellert@bloomberg.net;
Timothy R. Homan in Washington at
akowalski13@bloomberg.net
To contact the editor responsible for this story:
Christopher Wellisz at
cwellisz@bloomberg.net
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