(Bloomberg) — The number of Americans getting fired is hovering near the lowest levels in almost 15 years, indicating the slowdown in hiring last month will prove temporary.
An average 284,500 workers a week filed claims for jobless benefits over the past month, according to Labor Department data issued Thursday in Washington. The 282,500 average reached in early April was the lowest since June 2000. Another report showed sales of new homes slumped more than forecast in March, ending the strongest quarter in seven years on a weak note.
The lack of job dismissals is a sign of a healthy labor market that is typically consistent with larger gains in payrolls than the disappointing 126,000 increase in March. A rebound in employment would help bolster the consumer spending that accounts for almost 70 percent of the economy.
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"We're going to have better employment this month than last month," said Guy Berger, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut, who correctly projected the claims figure. "That's the backbone of the consumer and the consumer being able to spend," he said, adding "that's a pretty good basis on which to have an expansion in the U.S."
The Labor Department report showed applications for unemployment insurance payments increased by 1,000 to 295,000 in the week ended April 18. The figures correspond to the week the government surveys employers to calculate the monthly payroll data.
Low readings
Fewer than 300,000 claims were filed for the seventh consecutive week.
"That's consistent with payroll growth at about 250,000," Ian Shepherdson, chief economist at Pantheon Macroeconomics Ltd. in Newcastle, U.K., said in a research note. "Sustained sluggishness in payrolls with claims at their current level is very unlikely," he wrote, adding that he is projecting a 275,000 increase in April employment.
A report from the Commerce Department showed purchases of new homes dropped 11.4 percent in March to a four-month-low 481,000 annualized pace. The reading for February was revised up to 543,000, leaving the average for the first quarter as the highest since the first three months of 2008.
Gains in employment are lending support for the housing market, as are historically low mortgage rates. That's being countered by a limited supply of available homes and still-tight lending standards, creating a situation where improvement has been fitful.
Countervailing forces
"There are opposing forces there for housing demand, but on net the trend looks pretty favorable," said Michael Feroli, chief U.S. economist at JP Morgan Securities in New York, who is among the top forecasters of new-home sales over the past two years, according to data compiled by Bloomberg. "Mortgage rates help, job growth is pretty solid and those are the positives."
Stocks rose with equities trading near record highs as Caterpillar Inc. and EBay Inc. rallied on earnings outlooks. The Standard & Poor's 500 Index climbed 0.5 percent to 2,117.95 at 12:51 p.m. in New York. The S&P Supercomposite Homebuilding index declined 3.2 percent.
Quarterly reports from homebuilders disappointed investors who had been expecting stronger profits and pricing power for new housing.
PulteGroup Inc. plunged as the Atlanta-based builder reported earnings that missed analysts' estimates. D.R. Horton Inc., the largest U.S. builder, said Wednesday its gross margin on sales fell as it sold more low-priced homes.
Survey results
The median forecast of economists surveyed by Bloomberg projected jobless claims last week would drop to 287,000, with estimates ranging from 280,000 to 305,000. The prior week's reading was unrevised at 294,000.
Not all areas of the economy have been immune to firings. Oilfield service provider Baker Hughes Inc. announced Tuesday that it had reduced headcount by 10,500, or 17 percent of its workforce, in the first quarter. The Houston-based company previously had reported a cut of 7,000 positions as the drop in energy prices weighed on oil-related business.
A slump in capital spending within the oil industry, combined with the jump in the value of the dollar that is hurting exports, is probably contributing to a slowdown in manufacturing.
Manufacturing cools
A report from London-based Markit Economics Thursday showed its preliminary factory index decreased to a three-month low of 54.2 in April from 55.7. A reading above 50 for the purchasing managers' measure indicates expansion.
"Key to the slowdown was a weakening of export orders, in turn a symptom of the loss of competitiveness arising from the dollar's strength," Chris Williamson, chief economist at Markit, said in a statement. "However, while exporters are suffering, domestic demand looks to have remained robust, helping to sustain a reasonably strong production trend."
One reason U.S. demand is holding up is that households remain upbeat. Consumer confidence last week hovered near an almost eight-year high as gains in stock prices propped up sentiment for higher-income Americans.
While the Bloomberg Consumer Comfort Index fell to a five- week low of 45.4 in the period ended April 19, the gauge remains well above last year's average of 36.7, which was the best since 2007. The 47.9 reached earlier this month was the strongest since May 2007.
Sentiment of those earning less than $50,000 a year was the weakest in almost two months, while those at the highest end of the income scale were the most upbeat since August 2007.
Gross domestic product will grow at 3.1 percent annualized pace in the second quarter, picking up from a 1.4 percent in the first three months of the year, according to the median in a Bloomberg survey conducted April 3-8. The weakness in the first quarter probably reflected a widening trade deficit, declines in business investment by energy producers and the effects of harsh winter weather on construction and consumer spending.
With assistance from Victoria Stilwell, Nina Glinski, Shobhana Chandra and Kristy Scheuble in Washington and John Gittelsohn in Los Angeles.
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