March 25 (Bloomberg) -- Initial jobless claims fell to the lowest level in six weeks as the rebound in the economy encourages companies to make fewer cuts in payrolls.
First-time jobless applications declined by 14,000 to 442,000 in the week ended March 20, lower than anticipated, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance decreased, and those getting extended benefits also fell.
Employers are slowing the pace of payroll reductions, indicating budding confidence in an economy that’s been lifted by a pickup in manufacturing and expansion overseas. Companies need to move beyond jobs cuts and start hiring to ensure the recovery from the deepest recession since the 1930s is sustained.
“There is continued firming in the labor market,” Bill Hampel, chief economist at the Credit Union National Association in Washington, said before the report. Initial claims above 400,000 are not yet “consistent with growing employment. Once the job numbers start to improve and household income starts rising, people will have more to spend,” he said.
Economists forecast weekly claims would fall to 450,000, from a previously estimated 457,000 for the week ended March 13, according to the median of 43 projections in a Bloomberg News survey. Estimates ranged from 425,000 to 470,000.
The four-week moving average of claims, a less volatile measure than the weekly figures, decreased to 453,750 last week, the lowest level since September 2008, from 464,750.
The number of people continuing to receive jobless benefits decreased 54,000 in the week ended March 13 to 4.65 million, the lowest since Dec. 20, 2008. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Extended Benefits
The number of people who’ve used up their traditional benefits and are now collecting emergency and extended payments fell by about 345,800 to 5.7 million in the week ended March 6.
The figures released today were subject to the Labor Department’s annual revisions back to 2005. The revisions effectively reduced the average number of new claims by 5,000 to 10,000 in the past month, a Labor Department spokesman said.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.6 percent in the week ended March 13, today’s report showed. Thirty-seven states and territories had a decrease in claims for that same week, while 16 had an increase.
The Labor Department may report April 2 that the economy created 200,000 jobs in March, according to the median estimate of economists surveyed by Bloomberg.
Non-Farm Payrolls
Payrolls declined by 36,000 in February, less than forecast even as blizzards closed businesses on the East Coast. The jobless rate held at 9.7 percent for a second month. Economists surveyed by Bloomberg earlier this month anticipate the unemployment rate will fall to 9.5 percent by the fourth quarter and average 8.9 percent next year.
“The pace of job losses has slowed dramatically,” Federal Reserve Bank of San Francisco President Janet Yellen said in a speech in Los Angeles on March 23. “What I fear is that unemployment will stay high for years.”
President Barack Obama March 18 signed an $18 billion jobs bill into law that provides a tax break to companies hiring unemployed workers, saying additional steps are needed to drive down unemployment.
“There’s a lot more that we’re going to need to do to spur hiring in the private sector and bring about a full economic recovery,” Obama said.
Hiring at Caterpillar
Some companies are already hiring. Caterpillar Inc., the world’s largest maker of construction equipment, said March 17 that it plans to hire 500 workers starting this year to expand a plant in South Carolina.
Peoria, Illinois-based Caterpillar has already started to recall workers in Indiana and other states after cutting more than 19,000 jobs last year during the recession.
Siemens AG sees signs of improvement in the U.S. economy as its customers in the energy and transportation sectors invest, the industry division’s U.S. operations chief said yesterday.
“There are sparks of life there that I think are sustaining,” Daryl Dulaney, 56, said in a telephone interview. “It’s not just a blip on the screen.”
The Munich-based company’s Siemens Industry Inc. in the U.S. is hiring, he said, citing plant openings or expansions.
Others continue to cut workers. Delta Air Lines Inc.’s regional unit will eliminate 840 jobs in Cincinnati as it consolidates ground operations into a single airport concourse to reduce costs.
