U.S. Economy: Jobless Claims Fall, Consumer Confidence Climbs
Feb. 24 (Bloomberg) — Fewer Americans than forecast filed first-time claims to collect jobless benefits last week, indicating companies are reducing the pace of firings as they grow more confident in the economic outlook.
Applications for unemployment insurance decreased 22,000 to 391,000 in the week ended Feb. 19, the Labor Department said today. Claims have fallen in three of the past four weeks, pushing down the monthly average to the lowest level since July 2008. The Bloomberg Consumer Comfort Index rose to the highest since April 2008, reflecting an improving jobs picture.
Motorola Solutions Inc. and Intel Corp. are among firms that have signaled plans to hire, which will help bring down the unemployment rate. Other reports today showed orders for long- lasting manufactured goods climbed in January, led by a rebound in demand for aircraft, while sales of new houses dropped more than estimated.
“There is continued healing in the labor market,” said Michelle Meyer, a senior economist at Bank of America Merrill Lynch Global Research in New York. “We still feel pretty comfortable about the rebound in manufacturing. Growth in the first half will be driven by the business sector, with a rebound in manufacturing, and continued consumer spending.”
Stocks drifted between gains and losses as the labor market figures tempered concern that higher energy prices will derail the economy. The Standard & Poor’s 500 Index fell 0.1 percent to 1,305.83 at 11:42 a.m. in New York. Treasuries rose, pushing down the yield on the benchmark 10-year note to 3.43 percent.
No Special Factors
Economists projected jobless claims would drop to 405,000, according to the median forecast in a Bloomberg News survey. Estimates of 51 economists ranged from 375,000 to 420,000.
The four-week moving average, a less volatile measure, fell to 402,000 from 418,500 last week.
The Bloomberg gauge of consumer confidence, formerly the ABC News U.S. Weekly Consumer Comfort Index, was minus 39.2 in the week to Feb. 20, compared with minus 43.4 the prior week. Forty-nine percent of those polled held positive views on their financial situation, the most in a year.
The biggest two-month drop in the jobless rate since 1958 may be helping lift households’ spirits, boosting the odds that spending, which accounts for about 70 percent of the economy, will keep growing.
Orders for U.S. durable goods, which are meant to last at least three years, climbed 2.7 percent in January as demand for aircraft rebounded after plunging the previous month. The Commerce Department’s figures showed bookings excluding transportation equipment unexpectedly fell, reflecting a recurring pattern of declines in capital goods in the first month of a quarter.
Civilian Aircraft
Orders for civilian aircraft totaled $7.4 billion after collapsing to $148 million in December. Boeing Co., the largest U.S. maker of aircraft, this month said January airplane orders fell to 34 from 55 in December.
Shipments of non-defense capital goods excluding aircraft, used in calculating gross domestic product, decreased 2 percent after rising 2.5 percent in December.
The business spending that helped lead the economy out of recession may gain a second wind from a new tax provision that allows companies to depreciate 100 percent of investments in capital equipment this year.
More orders are prompting some manufacturers to add to payrolls.
‘Opportunities for Hiring’
“I do think we’ll expand, I think it’ll be more surgical and incremental,” Gregory Brown, chief executive officer of Motorola Solutions, said in a Feb. 18 interview at a Business Council meeting in Fort Lauderdale, Florida. “There’ll be opportunities for hiring, but I would characterize it as relatively modest going forward.”
Intel, the world’s largest chipmaker, last week announced plans to build a $5 billion microprocessor plant in Chandler, Arizona, and hire 4,000 U.S. employees this year.
The rate of improvement in the labor market means the jobless rate will be slow to decline, according to Federal Reserve policy makers who have maintained plans to buy $600 billion in Treasury securities by June to further boost the pace of recovery.
The housing market is struggling to strengthen, another Commerce Department report showed today. New-home sales fell 13 percent, more than forecast, to a 284,000 annual pace. Foreclosures will keep depressing prices, making distressed previously owned properties more attractive to prospective buyers.
Home prices fell 4 percent in the fourth quarter from a year earlier as record foreclosures sapped the confidence of homebuyers, according to a separate report today from the Federal Housing Finance Agency. The drop was the 13th consecutive year-over-year retreat and the largest since 2009’s third quarter.
“This is still a very weak demand picture,” said Jonathan Basile, a senior economist at Credit Suisse in New York. “There has been no recovery in housing starts, permits or new-home sales. We’re in a period where demand and supply will run well below average.”
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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