8,000 fewer apply for jobless benefits
WASHINGTON — Fewer Americans sought unemployment benefits last week, a sign that job cuts remain low as employers are confident enough in the business outlook to hold onto their staffs.
The Labor Department says applications for unemployment aid dropped 8,000 to a seasonally adjusted 276,000. The four- week average, a less volatile figure, ticked up 2,750 to 274,750.
Applications have been below 300,000, a historically low level, for 13 weeks.
Applications are a proxy for layoffs. The small number of people seeking benefits indicates that Americans are enjoying solid job security.
Most economists are hopeful that the low level of applications is a good sign hiring will remain healthy, as well.
Thursday’s report “suggests businesses really did look through the weakness in the first quarter,” said Ryan
Sweet, a senior economist at Moody’s Analytics in West Chester, Pa. “The job market continues to do reasonably well.”
Jim O’Sullivan, chief U. S. economist at High Frequency Economics, forecasts that the government’s May jobs report, to be released today, will show that employers added 240,000 jobs.
Applications “continue to show no sign of an uptrend, consistent with a still- strong trend in employment growth,” O’Sullivan wrote in a note to clients.
Analysts anticipate that the jobs report will show that employers added a solid 227,000 jobs last month, on top of the 223,000 added in April. They also forecast that the unemployment rate will remain 5.4 percent, a seven- year low.
The number of Americans receiving unemployment aid fell to just below 2.2 million, the fewest since November 2000. That’s just a fraction of the 8.5 million unemployed. Some of those out of work have used up all their benefits, while others, such as recent college graduates searching for work, aren’t eligible for aid.
Job growth has remained healthy even as economic growth has faltered. That’s an important sign that the slowdown hasn’t frightened employers and may be temporary. On Wednesday, payroll processor ADP said that businesses added 201,000 jobs last month, up from 165,000 in April. The ADP’s figures frequently diverge from the government’s more comprehensive report.
The economy contracted 0.7 percent in the first three months of the year, a sharp slowdown from growth of 3.6 percent in the second half of 2014. Yet most economists expect growth will recover to a 2 percent to 2.5 percent pace in the second quarter.
There are some signs the economy is turning around.
The trade gap tumbled 19.2 percent in April as exports rose slightly while imports fell. Imports were artificially inflated in March by the end of a labor dispute at West Coast ports, which unleashed a flood of overseas goods that had been trapped on the docks. The narrower trade gap in April should lift growth in the second quarter.
Americans increased their car purchases in May. Sales rose 2 percent to 1.64 million cars and trucks, the fastest sales pace since July 2005, according to Autodata Corp.
Still, consumers remain cautious and are reluctant to increase their spending in other areas. That has surprised economists, who expected greater hiring and lower gas prices to lift spending. Gas prices have picked up in recent months but remain about $ 1 a gallon cheaper than a year ago. Tepid consumer spending is holding back growth.
U. S. worker productivity declined more sharply in the first three months of the year than previously thought while labor costs rose more quickly.
Productivity fell at a 3.1 percent rate in the first quarter, a bigger drop than the 1.9 percent decline estimated a month ago, the Labor Department reported Thursday. Labor costs rose at a 6.7 percent rate in the first quarter, faster than the 5 percent rise first estimated.
The economy hit a soft patch in the winter with the overall economy, as measured by the gross domestic product, actually contracting in the JanuaryMarch quarter. But economists believe growth and productivity is rebounding. Still, productivity, the amount of output per hour of work, has been weaker in recent years and economists are split on the reasons why.
Yet they had anticipated Thursday’s numbers given last week’s GDP report.
Information for this article was contributed by Christopher S. Rugaber and Martin Crutsinger of The Associated Press, and by Michelle Jamrisko of Bloomberg News.