Jan. 9 (Bloomberg) — Applications for U.S. unemployment benefits fell last week to the lowest in a month as improvements in the economy prompted employers to retain workers.
Jobless claims declined by 15,000 to 330,000 in the period ended Jan. 4, the Labor Department reported today in Washington. The median forecast of 47 economists surveyed by Bloomberg projected 335,000. The data can be volatile after the holidays as temporary workers are dismissed, a Labor Department spokesman said as the report was released to the press.
Employers are probably becoming more confident the economy will pick up as consumer spending improves and fiscal policy becomes less restrictive after lawmakers agreed on ways to limit budget cuts slated for this year. A report tomorrow is projected to show that the employment gain for 2013 was the biggest in eight years.
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"The labor market is continuing to strengthen as we go into 2014," said Kevin Cummins, an economist at UBS Securities LLC in Stamford, Connecticut, who accurately forecast the drop in claims. "We should continue to see the unemployment rate go lower."
Stock-index futures held earlier gains after the report. The contract on the Standard & Poor's 500 Index maturing in March climbed 0.2 percent to 1,836.7 at 8:42 a.m. in New York.
Estimates in the Bloomberg survey ranged from 305,000 to 355,000. The Labor Department revised the prior week's claims to 345,000 from a previously reported 339,000.
No states were estimated last week, according to the report. Companies typically let go of temporary staff after the holidays, which means claims may see-saw through January, the Labor Department spokesman said.
Lower average
The four-week average of claims, a less-volatile measure than the weekly figure, dropped to 349,000 from 358,750.
The number of people continuing to receive jobless benefits climbed by 50,000 to 2.87 million in the week ended Dec. 28.
The unemployment rate among people eligible for benefits held at 2.2 percent, where it's been since early December, today's report showed.
Twenty-nine states and territories reported an increase in claims, while 24 reported a decrease. State data are reported with a one-week lag.
Lawmakers in Washington are debating whether to extend federal emergency payments for the long-term unemployed. That aid expired Dec. 28, ending unemployment benefits to about 1.3 million job-seekers. A measure to extend the program for three months cleared a key procedural hurdle in the Senate on Jan. 6.
Extended claims
The federal program started in 2008 and at one point provided a total of as many as 99 weeks of benefits. At the end of 2013 the maximum was 73 weeks, including 26 weeks of standard state-funded benefits.
First-time claims for unemployment insurance reflect weekly firings and typically drop before job growth picks up. Employers added an average 188,550 jobs per month last year through November, beating 2012's monthly tally of 182,750.
Yesterday, a report from the ADP Research Institute in Roseland, New Jersey, showed companies added 238,000 workers in December, the biggest increase since November 2012. A Labor Department report tomorrow may show total payrolls rose by 196,000 last month, according to a Bloomberg survey median. That would bring the total for the year to 2.27 million, the most since 2005.
Job gains and other signs of economic growth prompted the Federal Reserve to begin reducing its monthly bond purchases to $75 billion this month from $85 billion.
Fed views
At the central bank's December meeting, some members of the Federal Open Market Committee "expressed the view that the criterion of substantial improvement in the outlook for the labor market was likely to be met in the coming year if the economy evolved as expected," meeting minutes showed yesterday.
The rosier outlook has some companies hiring. Drugstore operator CVS Caremark Corp., based in Woonsocket, Rhode Island, hired 1,000 nurse practitioners last year as it expanded its network of in-store clinics. Atlanta-based chemical manufacturer Zep Inc., plans to add sales staff as demand picks up.
"The biggest reason why people are feeling better about the economy and returning to showrooms is the progress that has been made on the jobs front," General Motors Co. Vice President Kurt McNeil said on a January 3 earnings call. "That's the key to releasing even more pent-up demand in 2014."
Other employers continue look for ways to cut back. Macy's Inc., the second-largest U.S. department-store company, yesterday said it will eliminate about 2,500 to cut costs. The company also said it will close five stores in Arizona, Kansas, Missouri, New York and Utah, and that its workforce will remain at about 175,000 employees as it adds staff in other parts of the company.
With assistance from Chris Middleton in Washington.
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