Jobless claims' fall beats forecast

Week sees 289,00 filings; month’s average hits 8-year low

In this photo taken Wednesday, July 16, 2014, job seekers check out the opportunities at a Hiring Fair For Veterans in Fort Lauderdale, Fla. The Labor Department reports on the number of people who applied for unemployment benefits last week on Thursday, Aug. 7, 2014. (AP Photo/Alan Diaz)
In this photo taken Wednesday, July 16, 2014, job seekers check out the opportunities at a Hiring Fair For Veterans in Fort Lauderdale, Fla. The Labor Department reports on the number of people who applied for unemployment benefits last week on Thursday, Aug. 7, 2014. (AP Photo/Alan Diaz)

Fewer Americans filed applications for unemployment benefits last week, sending the average over the past month to an eight-year low, a sign the labor market continues to gain momentum.

Unemployment claims decreased by 14,000 to 289,000 in the week that ended Saturday from 303,000 in the prior period, the Labor Department said. The median forecast of 47 economists surveyed by Bloomberg called for an increase to 304,000.

Companies are holding on to more workers to keep up with increased orders and stronger consumer demand, contributing to a cycle of growth as the economy accelerates. Fewer layoffs and more jobs would support further gains in incomes and household spending, which accounts for 70 percent of the economy.

"This is one of the early steps in the process of a really good run for the labor market," said Thomas Simons, a money market economist at Jefferies LLC in New York, whose forecast for the drop in claims was the closest in the Bloomberg survey. "If we have fewer layoffs, it's a necessary precondition for an acceleration in hiring, and as hiring increases and the slack in the labor force is taken up, that should put some upward pressure on wages as well."

Estimates in the Bloomberg survey ranged from 290,000 to 315,000. The prior week's claims were revised from an initial reading of 302,000.

The four-week average, a less-volatile measure than the weekly figure, dropped to 293,500, the lowest since February 2006, from 297,500 the week before.

No states were estimated last week and there was nothing unusual in the data, a Labor Department spokesman said as the figures were released. The effect of the seasonal swings from auto-plant shutdowns that occur in July is typically over by now, the spokesman said.

The number of people continuing to receive unemployment benefits declined by 24,000 to 2.52 million in the week ending July 26.

In that same period, the unemployment rate among people eligible for benefits held at 1.9 percent, the report showed.

Initial unemployment claims reflect weekly firings and typically decrease before job growth can accelerate. While the timing and extent of closings to retool auto factories for the new model year can cause claims to swing this time of year, claims have remained low by historical standards in recent months as job growth accelerates.

U.S. employers added more than 200,000 workers to payrolls in July for a sixth straight month, the first time that's happened since 1997. Employment climbed by 209,000 after a 298,000 gain in June, while the unemployment rate rose to 6.2 percent as more Americans entered the labor force seeking work.

Even so, companies such as Amgen Inc. are still reducing head count to lower costs or refocus their business.

The world's biggest biotechnology company by sales will cut up to 2,900 employees, or 15 percent of its workforce, and close facilities in Washington State and Colorado, according to a statement last week. The move is part of a restructuring plan that focuses on drugs approaching market approval.

Last month Microsoft Corp. said it will eliminate as many as 18,000 jobs, the largest round of cuts in its history. The restructuring, which amounts to about 14 percent of its workforce and includes 12,500 factory and professional positions, is expected to be fully completed by June 2015.

Federal Reserve policymakers are monitoring the labor market's progress as they wind down their stimulus program. The central bank has said there is still room for improvement, and "a range of labor-market indicators suggests that there remains significant underutilization of labor resources," according to a statement last week from the Federal Open Market Committee.

Business on 08/08/2014

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