U.S. Initial Jobless Claims

U.S. Initial Jobless Claims Fell 4,000 to 310,000 (Update2)

By Courtney Schlisserman
May 31 (Bloomberg) -- The number of Americans filing first- time claims for state unemployment benefits unexpectedly fell last week, pointing to strength in the labor market.
Initial jobless claims declined by 4,000 to 310,000 in the week ended May 26, the Labor Department said today in Washington. The four-week average, a less volatile measure, rose to 304,500.
Job security is keeping Americans spending in the face of record gasoline prices and declining home values. A government report tomorrow is forecast to show hiring rebounded in May and the unemployment rate stayed close to a five-year low.
``There aren't a whole lot of companies shedding workers,'' said Russell Price, senior economist at H&R Block Financial Advisors Inc. in Detroit, who accurately predicted the decline in claims. ``We are rather tight in unemployment levels.''
The economy grew last quarter at a 0.6 percent annual rate, the weakest in more than four years, as housing slumped, the trade deficit widened and businesses cut inventories, a separate government report showed today. The gain in gross domestic product compares with a 1.3 percent pace estimated last month.
Economists forecast claims would rise to 314,000 from an originally reported 311,000 the week before, according to the median of 38 projections in a Bloomberg News survey. Estimates ranged from 300,000 to 318,000.
So far this year, weekly claims have averaged 319,200, compared with 313,000 for all of last year.
Continuing Claims
The number of people continuing to collect state unemployment benefits fell to 2.472 million in the week that ended May 19 from 2.524 million a week earlier. The unemployment rate among people eligible for benefits, which tends to track the U.S. jobless rate, held at 1.9 percent.
The government will probably report tomorrow that hiring in May accelerated, with U.S. employers creating 135,000 jobs, according to a Bloomberg survey of economists. The unemployment rate is forecast to be unchanged at 4.5 percent.
Today's report showed that 33 states and territories had an increase in claims for the week ended May 19, while 19 had a decrease and one was unchanged. These figures, along with continuing claims and the unemployment rate among people eligible for benefits, are reported with a one-week lag.
An expanding labor market, along with rising stock prices, is boosting consumer confidence. The Conference Board said this week that its index of sentiment rose more than forecast. The percentage of survey respondents saying jobs are hard to get fell to 19.9 percent from 20.4 percent.
Payroll Survey
Companies added 97,000 jobs in May, according to a private report based on payroll data released yesterday. The increase followed a revised gain of 61,000 in April that was smaller than previously estimated, according to ADP Employer Services. The report is based on data from 364,000 businesses with about 22 million workers on payrolls.
Consumers kept the economy growing as housing and manufacturing slumped last quarter. Consumer spending is likely to be supported by ``continued advances in employment and incomes, as well as gains in stock prices,'' the Federal Reserve said in minutes of its May 9 Open Market Committee meeting released yesterday.
Still, there are signs the labor market may be cooling.
The number of firms announcing cuts of 50 or more workers rose last month to 1,224 from 1,082 in March, the Labor Department said on May 23. The announcements translated into 127,274 filings for initial jobless claims, compared with 123,974 a month earlier, and were led by cuts among manufacturers and construction companies.
International Business Machines Corp., the world's largest computer-services company, yesterday said it was cutting about 1,570 jobs, mainly in its technology services unit. Most of the cuts are in North America, said Armonk, New York-based IBM.

**original source = bloomberg**