Your Economy (No Politics)

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Initial Jobless Claims in U.S. Fell 10,000 Last Week
Bob Willis in Washington


April 20 (Bloomberg) -- First-time claims for U.S. unemployment benefits fell more than forecast last week and the number of Americans on jobless rolls stayed close to a five-year low, signaling a strengthening labor market.

Initial jobless claims declined by 10,000 in the week ended April 15 to 303,000, the Labor Department said today in Washington. The four-week average, a less volatile measure, dropped to 305,250, the lowest since Feb. 25.

Companies are reluctant to trim their workforces as demand stays strong and the lowest unemployment rate since 2001 makes it harder to find qualified employees. Job and wage growth may encourage Americans to keep spending in the face of higher gasoline prices.

``The fall in first-time jobless claims is consistent with a solid pace of jobs creation this year,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi UFJ in New York. ``We are expecting well over 2 million new jobs to be created this year by business, and this will keep consumer spending on a fast track.''

Jobless claims were expected to fall to 308,000 last week, according to the median forecast in a Bloomberg News survey of 28 economists. Estimates ranged from 300,000 to 330,000.

The number of people continuing to collect state jobless benefits rose to 2.439 million in the week ended April 8 from 2.421 million, which was the lowest since January 2001. The four- week average dropped to 2.439 million, the lowest since Feb. 3, 2001.

Survey Week

The claims ``data are for the survey week for payroll employment and are very close to where they were a month ago,'' said Steven Wood, chief economist at Insight Economics in Danville, California. ``This indicates that labor markets remain strong.''

The unemployment rate fell to 4.7 percent in March and the economy generated 590,000 jobs in the first quarter, the most since the last three months of 2004, the government reported April 7.

The Treasury's 4 1/2 percent note maturing in February 2016 fell 3/32, pushing up the yield 1 basis point to 5.04 percent at 8:47 a.m. in New York.

The unemployment rate among people eligible for benefits, which tends to track the U.S. jobless rate, held at 1.9 percent in the week ended April 8.

States

The Labor Department also said 44 states and territories reported an increase in new claims, while eight reported a decrease. These figures are reported with a one-week lag.

Claims tend to fall as payrolls rise, and together with continuing claims, provide a good indication of the state of the labor market. Initial claims of 310,000 translate into monthly payroll growth of between 200,000 and 250,000, said Ethan Harris, chief U.S. economist at Lehman Brothers Inc. in New York.

``We are now operating in the vicinity of full employment,'' Janet Yellen, president of the Federal Reserve Bank of San Francisco, said at a conference on April 18. ``The market for skilled workers does appear to have tightened noticeably, with some upward wage pressure emerging in some sectors.''

Workers' average hourly earnings in March were up 3.4 percent from the same month last year, the second-biggest gain since September 2001, according to the Labor Department.

Federal Reserve

The Fed has raised the overnight lending rate in 15 quarter- point steps since June 2004, to 4.75 percent. The central bank is forecast to boost it again at the May 10 meeting, according to economists surveyed by Bloomberg.

The world's largest economy will probably expand 3.3 percent this quarter and slow to a 3 percent pace by the end of the year, according to a Bloomberg survey of economists taken from April 3 to April 7. The economy probably expanded at a 5 percent rate in the first quarter, according to the median forecast of 20 economists in a separate survey.

Among companies adding staff, Lockheed Martin Corp., the world's largest defense company, has begun hiring some of the 1,000 extra workers it says it would need at an Owego, New York, plant should it win a $10 billion government helicopter order, Lockheed Helicopter Systems head Stephen Ramsey said in an interview on April 6.

Still, other companies, particularly in the ailing auto industry, are cutting staff. Ford Motor Co. will close vehicle- assembly plants in Minnesota and Virginia in 2008, affecting about 4,300 employees, as part of its plan to cut 30,000 jobs by 2012.

``These are necessary steps we must take to move the business forward,'' Ford's Executive Vice President Mark Fields said on a conference call on April 13.

http://www.bloomberg.com/apps/news?pid=10000103&sid=awbd0GM3_S.Q