The number of Americans filing new claims for unemployment benefits held near a 15-year low last week in a sign that the labour market was strengthening despite moderate economic growth. Initial claims for state unemployment benefits rose 3,000 to a seasonally adjusted 265,000 for the week ended May 2, the Labour Department said on Thursday. That was well below the increase to 280,000 that economists had forecast.
Claims for the prior week were unrevised at 262,000, which was the lowest reading since April 2000. The sustained strength suggests March's sharp step down in job growth was likely an aberration, and could keep the Federal Reserve on track to raise interest rates this year. "This provides support that March's weakness was temporary and it underpins expectations that nonfarm hiring will rebound in April and continue to post healthy rates of job growth in the coming months," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, hits its lowest level since May 2000. Claims, which remained below the key 300,000 threshold for a ninth straight week, are one of the timely indicators of the health of the US economy. At current levels, they suggest positive momentum in the economy, even though growth stumbled badly last quarter. Last week's claims have no bearing on Friday's employment report for April as they fall outside the survey period for the data.
However, the low trend in claims provides optimism that nonfarm payrolls rebounded in April, despite a report on Wednesday showing that private employers last month hired the fewest workers in more than a year. "This report leaves us fairly comfortable with our view that payrolls in April grew by around 200,000," said John Ryding, chief economist at RDQ Economics in New York. A Reuters survey of economists forecast nonfarm payrolls increased 224,000 in April after gaining 126,000 in March, when hiring was held back by bad weather.
Expectations for a relatively strong employment report were also bolstered by a separate report showing small businesses increased hiring last month. The National Federation of Independent Business said businesses added an average of 0.14 workers per firm last month. Fifty-three percent of small businesses reported hiring or trying to hire, up 3 points from March, with the majority saying there were few or no qualified applicants for the positions they were trying to fill.
April's employment report could offer new clues on the strength of the economy's recovery after a mix of cold weather, a strong dollar, port disruptions and deep spending cuts by energy firms brought first-quarter growth to a crawl. So far April data on automobile sales and manufacturing suggest moderate momentum in the economy at the start of the second quarter. The claims report also showed the number of people still receiving benefits after an initial week of aid declined to the lowest reading since November 2000, suggesting more long-term unemployed are getting jobs. While the overall labour market is strengthening, lower oil prices are putting a strain on employment in a energy sector.
There were more than 20,000 job cuts in the sector last month, according to global outplacement consultancy Challenger, Gray & Christmas. That brought the total job losses for the industry so far this year to 68,285. Schlumberger, the world's No 1 oil-field services provider, Baker Hughes and Halliburton have all announced multiple rounds of job cuts in recent months.
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