Initial jobless claims drop to lowest level since April 2006

The decrease in filings doesn’t signal a change in job market conditions

Topics: Unemployment, Jobs, Labor Department, National Federation of Independent Business,

Jobless claims in the U.S. declined last week to the lowest level since April 2006 as work on computer systems in two states caused those employment agencies to report fewer applications.

First-time claims for unemployment insurance fell by 31,000 to 292,000 in the week ended Sept. 7, which also included the Labor Day holiday, a Labor Department report showed today in Washington. The median forecast in a Bloomberg survey called for 330,000 applications.

The decrease in filings doesn’t signal a change in job- market conditions because most of it was caused by computer- network conversions in the two states, according to a Labor Department spokesman. The pace of job cuts has waned since the end of last year, setting the stage for faster payroll and income growth that would help propel consumer spending.

“Stronger job growth may be on the horizon,” said Millan Mulraine, director of U.S. rates research at TD Securities in New York. “When we start seeing improvement in the labor market, I think that will provide another tailwind for confidence, and spending, going forward.”

Stocks were little changed as investors weighed the prospect for cuts in Federal Reserve stimulus and watched developments on Syria. The Standard & Poor’s 500 Index fell less than 0.1 percent to 1,688.54 at 11:01 a.m. in New York.

Estimates for jobless claims in the Bloomberg survey of 50 economists ranged from 315,000 to 350,000. The four-week moving average of claims, a less volatile measure than the weekly figures, fell to 321,250 last week, the lowest since October 2007, from 328,750.

 

Computer Systems

 

The Labor Department spokesman said one large and one small state retooled their computers and reported fewer applications than usual. The spokesman didn’t name the two states.

Another report from the department showed the cost of goods imported into the U.S. was unchanged in August. No change in the import-price index followed a 0.1 percent gain in July. The median forecast called for a 0.5 percent advance.

The cost of imported goods minus fuels fell 0.2 percent last month after a 0.4 percent decrease. Prices of autos made overseas fell 0.1 percent. They were down 1 percent in the 12 months ended in August, the biggest year-over-year slump since May 1990.

 

Continuing Claims

 

The number of people continuing to receive jobless benefits dropped by 73,000 to 2.87 million in the week ended Aug. 31. The continuing claims 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 decreased by about 40,000 to 1.46 million in the week ended Aug. 24.

The unemployment rate among people eligible for benefits fell to 2.2 percent in the last week of August, from 2.3 percent.

Thirty-four states and territories reported a decline in claims, while 19 reported an increase. These data are reported with a one-week lag.

Initial jobless claims reflect weekly firings and typically wane before job growth can accelerate. Payrolls expanded by 169,000 workers last month after rising 104,000 in July, Labor Department data showed on Sept. 6. The average over the two months was the smallest since June and July of last year. The jobless rate dropped to 7.3 percent in August, the lowest since December 2008, as workers left the labor force.

 

Small Business

 

At the same time, the percentage of small-business owners planning to hire more workers rose in August to its highest level since 2007, a National Federation of Independent Business report showed this week. The index climbed to 16 percent from 9 percent the prior month.

Some companies in the health-care industry are adding jobs. In Dallas and Park City, Utah, staffing company Supplemental Health Care is partnering with Parkland Health & Hospital Systems to recruit and hire full-time employees, Supplemental said in a Sept. 10 release. In the past 8 months, the staffing company has filled 500 full-time Parkland positions, the release stated.

“As the necessity for qualified healthcare providers increases under the Affordable Care Act, organizations are looking for ways to improve upon current recruiting and hiring practices,”  Janet Elkin, chief executive officer for Supplemental, was quoted in the statement.

 

Mortgage Rates

 

At the same time, higher mortgage rates are taking a toll on lenders. Bank of America is cutting 2,100 employees and closing 16 offices by Oct. 31, people with knowledge of the plan said. Refinancing activity has declined following a recent climb in mortgage rates that has curbed demand.

Federal Reserve officials, set to meet Sept. 17-18, are watching the job market along with other economic data to determine when to begin scaling back the central bank’s $85 billion in monthly asset purchases. Policy makers in July affirmed a pledge to continue bond buying until they saw signs the outlook for the labor market has “improved substantially.”

–With assistance from Ainhoa Goyeneche in Washington and Hugh Son and Dakin Campbell in New York. Editors: Vince Golle, Christopher Wellisz

 

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

 

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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