WASHINGTON – Claims for unemployment benefits declined last week to the lowest level in a month, easing concern that the US labor market is faltering.
First-time claims dropped by 1,000 to 367,000 in the period ended May 5, the Labor Department said today in Washington. Other reports showed that a gauge of consumer confidence declined to a three-month low, and the trade deficit widened on rising demand for imports from oil to autos.
Claims are returning to levels reached in February and March, indicating a surge last month probably reflected difficulty in adjusting the data for an Easter holiday that came earlier this year than last. Declines in dismissals point to a brighter labor market that would help sustain consumer spending after payroll growth slowed last month.
“The health of the labor market is improving,’’ said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. Hoffman is the most accurate forecaster of payrolls in the two years ended in March, according to Bloomberg data. “It gives me a little bit of encouragement that the May employment report won’t be a third-strike-you’re-out type of number.’’
Stocks rose as Greece attempted to form a new government to try and remain in the euro area. The Standard & Poor’s 500 Index climbed 0.3 percent to 1,357.99 at the close in New York.
The latest week’s figure compares with an average of 373,000 claims since the end of February. Initial jobless claims reflect weekly firings and tend to fall as job growth – measured by the monthly nonfarm payrolls report – accelerates.
American employers added fewer workers than forecast in April and the jobless rate unexpectedly fell as people left the labor force, the Labor Department said on May 4. Payrolls climbed 115,000, the smallest gain in six months, after a 154,000 March increase.
At the same time, in markets where the employment has improved, business is picking up.
“Although national job growth numbers have been uneven and a bit disappointing over the past few months, we are seeing much improved employment trends in many of our markets,’’ Allan Merrill, president and chief executive officer of Beazer Homes USA Inc. in Atlanta, said in a May 2 earnings call.
A rebound in job growth would help shore up consumer confidence, which fell in the week ended May 6 to the lowest level since early February. Consumer spending accounts for about 70 percent of the economy.
Thursday’s Commerce Department figures on the trade deficit pointed to strong domestic demand as US consumers and companies bought imported crude oil, computers, automobiles and televisions.
The deficit widened 14 percent to $51.8 billion.
The trade report “is an indication that consumer spending has remained quite strong in March,’’ said Millan Mulraine, a senior US strategist at TD Securities in New York. “We should see some of that positive momentum carry into the second quarter.’’
The pickup in the value of imports reflected higher fuel prices and a bounce back in shipments from China following the week-long Lunar New Year celebrations amid increasing consumer spending. Sales by American companies to counterparts in Mexico, the European Union, and South Korea reached the highest ever, giving no indication of a slowdown in global demand.