Jobless Claims Fall in Latest Week; 4Q Productivity Slips

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Inside The San Diego Veteran Job Fair As Jobless Claims In U.S. Climb
Sam Hodgson/Bloomberg via Getty Images
By Jeanna Smialek

Fewer Americans than projected filed applications for unemployment benefits last week, an indication companies are holding on to staff even as cold weather threatens to slow the world's largest economy.

Jobless claims declined by 26,000 to 323,000 in the week ended March 1, fewer than any economist forecast in a Bloomberg survey and the least since the end of November, a Labor Department report showed Thursday in Washington. A Labor Department spokesman said the recent fluctuation coincides with states most affected by winter storms.

Fewer dismissals could set the stage for more robust hiring, in turn spurring consumers to feel more confident and giving them the means to spend more. That would help the economy pick up after a weather-induced slowdown in gauges from housing starts to retail sales early in the year.

"The overall trend here is positive and consistent with a gradually improving job market," said Gennadiy Goldberg, a U.S. strategist at TD Securities in New York. "We have stemmed the bleeding in layoffs, what remains is to add jobs."

The median forecast of 51 economists surveyed by Bloomberg called for 336,000. Estimates ranged from 325,000 to 350,000. The prior week's claims were revised up to 349,000 from an initial reading of 348,000. The Labor Department said no states were estimated last week.

Productivity Gain

Another report showed worker productivity rose less than previously calculated in the fourth quarter. %VIRTUAL-article-sponsoredlinks%Output per hour climbed at 1.8 percent annualized rate from October through December, less than the prior estimate of a 3.2 percent gain, according to separate Labor Department figures.

Labor costs tied to the gain in efficiency dropped at a 0.1 percent pace following a 2.1 percent decrease in the third quarter. For all of 2013, expenses climbed 1.1 percent, the smallest gain since 2010, when they dropped 1.2 percent.

Stock-index futures held earlier gains after the report. The contract on the Standard & Poor's 500 index (^GPSC) maturing in March climbed 0.2 percent to 1,875.4 at 8:42 a.m. in New York.

Thursday's claims data showed the four-week average, a less-volatile measure than the weekly figure, decreased to 336,500 from 338,500 the week before.

Frigid temperatures and heavy snow in the Northeast and Midwest have weighed on recent economic data. A report from the Commerce Department last month showed retail sales declined in January by the most since June 2012, falling 0.4 percent after a 0.1 percent drop in December. Housing starts dropped 16 percent in January from the prior month, data Feb. 19 showed.

Payroll Forecast

The economy added 146,000 jobs in February, based on the median estimate in a Bloomberg survey of economists, after Labor Department data showed that the U.S. added 113,000 positions for January, missing the median projection of 180,000. The Labor Department is scheduled to release February figures tomorrow.

The number of people continuing to receive jobless benefits decreased by 8,000 to 2.91 million in the week ended Feb. 22, the fewest this year, Thursday's report showed.

Thirty-six states and territories reported a drop in claims, while 17 reported an increase. The unemployment rate among people eligible for benefits held at 2.2 percent. Both pieces of data are also report reported with a one-week lag.

Initial jobless claims reflect weekly firings and typically wane before employment growth picks up.

General Dynamics, a Falls Church, Va.-based defense company, is still letting go workers. The company will eliminate 1,195 call center positions in Houston, with most jobs ending by April 25, it said in a February letter to the Texas Workforce Commission.

Expanding Staff

Other companies are expanding to help them draw customers. ZipRealty, an Emeryville, Calif.-based residential real estate brokerage, is among them.

"We're increasing our transaction capacity and production pipeline by hiring new agents in the cities we serve," Lanny Baker, president and chief executive officer, said in a March 3 call. "Our growing agent ranks and lead volume gains in 2013 are expected to contribute the transaction volume this year."

Federal Reserve policy makers are focusing on the job market to help guide the pace at which they're reducing stimulus. The Federal Open Market Committee's next meeting ends March 19. The Fed will continue cutting monthly bond purchases by $10 billion per meeting, based on a Bloomberg survey of economists.

The Fed's view on the economy could be complicated by weather distortions.

"What we need to do, and will be doing in the weeks ahead, is to try to get a firmer handle on exactly how much of that set of soft data can be explained by weather and what portion, if any, is due to a softer outlook," Fed Chair Janet Yellen said while speaking to the Senate Banking Committee Feb. 27.

To contact the reporter on this story: Jeanna Smialek in Washington at jsmialek1@bloomberg.net

To contact the editor responsible for this story: Carlos Torres at ctorres2@bloomberg.net


10 PHOTOS
9 Numbers That'll Tell You How the Economy's Really Doing
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Jobless Claims Fall in Latest Week; 4Q Productivity Slips
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.
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