Bob Truncali of DeVry College, left, talks with job seeker James Echeverry of Queens at Choice Career Fairs' New York career fair at the Holiday Inn Midtown in New York, U.S., on Tuesday, May 13, 2014.Craig Warga/Bloomberg
The number of Americans filing applications for unemployment benefits unexpectedly fell last week, pushing the average over the past month to the lowest level in eight years and signalling that employers are hanging on to workers as the economy improves.
Jobless claims declined by 1,000 to 287,000 in the week ended Oct. 4, a Labor Department report showed today in Washington. The median forecast of 50 economists surveyed by Bloomberg called for 295,000. The four-week average, considered a less volatile measure, decreased to 287,750, the least since February 2006.
Firings are hovering around the lowest in almost a decade as employers hang onto workers to meet rising demand. That lays the ground for stronger gains in hiring and wages that will give the world's largest economy a boost even as global growth cools.
"We've had a good start to employment growth in the first nine months of this year, and there's absolutely no indication that this trend is breaking heading into October," said Guy Berger, U.S. economist at RBS Securities Inc. in Stamford, Connecticut, who projected claims would drop. "The stage is set for another pretty good employment month."
Stock-index futures trimmed earlier losses after the report. The contract on the Standard & Poor's 500 Index maturing in December fell 0.2 per cent to 1,957.7 at 8:35 a.m. in New York.
No states estimated data last week and there was nothing unusual in the report, an agency spokesman said as the figures were released.
Claims estimates in the Bloomberg economist survey ranged from 280,000 to 305,000. The Labor Department revised the previous week's figure from an initially reported 287,000.
The four-week moving average for jobless claims dropped last week from 295,000 in the prior period.
The number of people continuing to receive jobless benefits fell by 21,000 to 2.38 million in the week ended Sept. 27, the fewest since May 2006. The unemployment rate among people eligible for benefits that week held at 1.8 per cent.
Initial jobless claims reflect weekly firings and typically wane before job growth can accelerate.
Companies hired 248,000 workers in September, Labor Department figures showed last week. The unemployment rate fell to 5.9 per cent last month, the lowest level since 2008.
Stronger prospects for economic growth and consumer demand could make companies feel more comfortable hiring.
The U.S. economy is predicted to grow 2.2 per cent this year, compared with a 1.7 per cent projection in July, the International Monetary Fund said this week. Next year, the U.S. is seen expanding 3.1 per cent, compared with a 3 per cent pace forecast in July.
That growth is partly consumer-driven. The University of Michigan final sentiment index increased to 84.6 in September from 82.5 in August, reaching its highest level in 14 months as Americans' outlooks for the economy improved.
Even so, Deerfield, Illinois-based Walgreen Co. is among companies that remain cautious, slowing hiring as a result.
"We are realistic about the headwinds we face for the year," including a cautious consumer, Chief Executive Officer Gregory D. Wasson said in a Sept. 30 conference call. Wasson's colleague, Chief Financial Officer Timothy McLevish, said in the same call that the chain is undertaking a cost-cutting program that includes hiring freezes.
Federal Reserve policy makers are watching for evidence the labor market has been restored to full health before raising interest rates, which have been held near zero since December 2008. Most Fed policy makers indicate they expect an initial rate rise next year.
"The consensus view is that lift-off will take place around the middle of next year. That seems like a reasonable view to me," New York Fed President William C. Dudley said Oct. 7 in a speech in Troy, New York.