BL: Jobless Claims in U.S. Fall by 10,000 to 453,000 as Firings Stay Elevated
By Shobhana Chandra
June 3 (Bloomberg) -- The number of Americans seeking jobless benefits last week fell to 453,000, a level that signals firings remain elevated even as the economy expands.
Initial jobless claims dropped by 10,000 in the week ended May 29, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected claims would drop to 455,000, according to the median forecast. The number of people receiving unemployment insurance and those getting extended payments increased.
The jobless rate may hover around 10 percent as companies from Hewlett-Packard Co. to Hershey Co. keep trimming staff to reduce costs. The claims data contrast with other figures that indicate employers are hiring as sales improve, and a report tomorrow may show payrolls climbed in May for the fifth consecutive month.
“We’re seeing a very uneven recovery in the labor market,” Lindsey Piegza, an economist at FTN Financial in New York, said before the report. “Demand is slowly returning but businesses are not sure if it’ll be sustained.”
The median forecast was based on a survey of 42 economists. Estimates ranged from 440,000 to 475,000. The Labor Department revised the prior week’s figure up to 463,000.
States Estimated
Due to the Memorial Day holiday this week, states had one less day to compile data. That prompted three states, Wyoming, Virginia and California, to supply estimates for last week, a Labor Department spokesman said. The government estimated claimed for three other states and territories, including the Virgin Island, Hawaii and Idaho, due to the shortened workweek.
There were no other special factors affecting last week’s data, the spokesman said.
Worker productivity rose at a 2.8 percent annual pace in the first quarter, less than forecast, another report from the Labor Department showed today. Efficiency climbed 6.1 percent over the past four quarters, the biggest 12-month gain in nine years, showing employers squeezed more from remaining staff to control expenses. Labor costs declined at a 1.3 percent pace.
Companies in the U.S. added workers in May, according to data from a private report based on payrolls. The 55,000 increase was the fourth in a row and followed a revised 65,000 rise the prior month that was twice as much as initially estimated, data from ADP Employer Services showed today.
Stock-index futures maintained earlier gains after the reports. The contract on the Standard & Poor’s 500 Index rose 0.5 percent to 1,101.6 at 8:35 a.m. in New York. Treasury securities fell.
Higher Average
The claims figures showed the four-week moving average, a less volatile measure than the weekly figures, climbed to 459,000 last week from 457,250.
The number of people continuing to receive jobless benefits increased by 31,000 in the week ended May 22 to 4.67 million. The 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 rose by about 57,000 to 5.4 million in the week ended May 15.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.6 percent in the week ended May 22.
Twenty-five states and territories reported a decline in claims, while 28 reported an increase. These data are reported with a one-week lag.
Less Correlation
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates. That relationship has broken down in recent months as some companies continue to cut staff, while others expand, pointing to an uneven recovery.
The disconnect may have several sources, Richard Berner, co-head of global economics at Morgan Stanley & Co. in New York, wrote in a May 28 note to clients. One reason is the extension of benefits -- up to 99 weeks in some states -- raises the incentive to file, he said. While half the claims are typically rejected, the jump in claims in March and April may reflect more ineligible filers.
An increase in filings by construction workers and by temporary government employees who are helping with the decennial census may also be boosting claims, Berner said.
Payroll Gains
Labor Department figures due tomorrow may show payrolls climbed by 515,000 in May, boosted by hiring for the census, according to the Bloomberg survey median. Private payrolls likely increased by 178,000 following a gain of 231,000 in April.
The unemployment rate probably fell to 9.8 percent in May, from 9.9 percent the prior month, the survey showed.
Other reports also indicate the job market is improving. Planned firings dropped 65 percent in May to 38,810 from 111,182 a year earlier, according to figures released yesterday by Chicago-based Challenger, Gray & Christmas Inc.
The Institute for Supply Management’s gauge of manufacturing employment climbed last month to the highest level since May 2004, as factories added workers to meet the greatest export demand in two decades as well as a revival in domestic orders.
Companies announcing hiring plans this week included Lowe’s Cos., the second-largest U.S. home improvement retailer. The Mooresville, North Carolina-based company said it is adding more than 1,400 positions for employees to visit customers’ homes to sell them windows, doors and other products, and will fill those jobs internally and by taking on new employees. OR
Some businesses announced job cuts this week. Palo Alto, California-based Hewlett-Packard, the world’s largest personal- computer maker, plans to eliminate about 9,000 jobs and retool its computer-services business. Hershey, the 116-year-old chocolate maker based in Hershey, Pennsylvania, may cut 500 to 600 jobs from a historic plant that produces chocolate Kisses.
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
Last Updated: June 3, 2010 08:40 EDT
