U.S. Initial Jobless Claims Fell 35,000 to 302,000 Last Week June 8 (Bloomberg) -- The number of Americans filing first- time applications for state unemployment insurance dropped more than expected to 302,0000 last week, a period shortened by the Memorial Day holiday, a government report showed.
Initial jobless claims dropped by 35,000 in the week that ended June 3, the lowest in two months, from 337,000 a week earlier, the Labor Department said today in Washington. The four- week moving average, a less volatile measure, fell to 327,750 from 333,500.
The Labor Department often has difficulty adjusting the claims figures during holidays, a spokesman said. The jump in claims in previous weeks suggests companies have stepped up firings as rising interest rates and near-record gasoline prices restrain consumer spending and home sales. Payrolls growth may continue to slow after employers added the fewest jobs in seven months in May, economists said.
``The trend in claims appears to have risen, a development consistent with downshifts in growth and employment,'' Haseeb Ahmed, an economist at JPMorgan Chase Bank in New York. ``A June rebound in employment, following two consecutive disappointing months, is unlikely.''
Economists expected the number of claims to drop to 330,000 last week from a previously reported 336,000 a week earlier, according to the median of 38 estimates in a Bloomberg News survey. Forecasts ranged from 318,000 to 345,000 claims for the week.
The number of people continuing to collect state jobless benefits fell to 2.415 million in the week that ended May 27 from 2.420 million a week earlier.
Payrolls Report
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 May 27. The Labor Department also said 33 states and territories reported an increase in new claims, while 19 reported a decrease. One reported no change. These data are reported with a one-week lag.
Employers added 75,000 workers to payrolls in May, the Labor Department reported last week. The gain followed a revised 126,000 April increase that was less than the government initially reported.
The Labor Department's separate survey of households showed the jobless rate fell to 4.6 percent last month, the lowest since July 2001, from 4.7 percent.
Businesses have become reticent to hire as growth slows. Economists trimmed their second-quarter U.S. growth forecasts as consumers restrained spending, according to the latest monthly survey by Bloomberg News. The economy will expand at an annual rate of 3 percent from April through June, down from a 3.5 percent estimate last month, according to the median forecast of 70 economists surveyed from May 30 through June 7.
Borrowing Costs
Higher borrowing costs and gasoline prices are leaving consumers less to spend on other goods. Autos sold at a 16.1 million annual pace last month, the lowest since November, industry reports last week showed.
``Fuel prices continue to be a top concern for our customers,'' Wal-Mart Stores Inc. Chief Financial Officer Tom Schoewe said last week.
May sales at stores open at least a year rose 2.3 percent, at the low end of Wal-Mart's forecast range. Store traffic at the world's biggest retailer fell last month as shoppers made fewer trips and limited spending to items such as food, the Bentonville, Arkansas-based company said.
Several states in recent weeks said automakers and construction companies had picked up the pace of firings.
For the week ended May 27, claims in Michigan rose by 8,811, due mainly to firings in the auto and transportation equipment industries.
Home Sales
Because auto and home sales are susceptible to rising interest rates, the jump in claims among those businesses shows the higher rates are beginning to bite after two years of increases by the Federal Reserve, economists said.
``The recent rise in claims is likely flashing advance warning that the economy is slowing under the weight of tighter monetary policy,'' Thomas Porcelli, economist at Merrill Lynch & Co. in New York, said in a June 2 report to clients.
Other companies are also suffering. Delta Air Lines Inc., the third-largest U.S. airline, said last week it now expects to cut 9,000 jobs, the high end of its previous forecast, as it completes its bankruptcy reorganization. The Atlanta-based carrier filed for Chapter 11 protection on Sept. 14 as fuel expenses climbed.
Not all workers are likely to feel the sting of firings equally. Dell Inc., the biggest maker of personal computers, said last week it plans to expand operations in the Nashville, Tennessee, area by adding as many as 1,000 jobs there. Most of the new jobs will be in customer support and will be added this year, the Round Rock, Texas, company said.
``It's very competitive to find good people in the skilled jobs market,'' Anthony Nieves, chairman of the Institute for Supply management's non-manufacturing committee, said in a June 5 news conference. ``In many of the industries they have been adding to staff. They've been having difficulty filling all the positions they've had open.''
The group's index of service industries, released earlier this week, showed the largest part of the economy expanded at a slower pace last month and more companies expressed concern about higher prices for energy and raw materials. Still, the group's employment index rose.
To contact the reporter on this story: Carlos Torres in Washington [email protected].
Last Updated: June 8, 2006 08:30 EDT
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