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By Lorraine Woellert
WASHINGTON – Fewer Americans filed applications for unemployment benefits last week, indicating companies are confident demand will be sustained in the face of federal budget cuts and tax increases.
Jobless claims decreased by 11,000 to 346,000 in the week ended June 1 from a revised 357,000, the Labor Department reported today in Washington. The median forecast of 47 economists surveyed by Bloomberg called for a drop to 345,000. Continuing claims declined for the second time in three weeks.
Fewer dismissals put employers in a position to add to headcounts should sales pick up in the second half of the year. A report tomorrow is projected to show limited improvement in the pace of hiring as federal budget cuts took hold and the economy began to cool.
“Improvement in employment is helping to sustain consumer spending,” Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, said before the report. “As the headwinds from the fiscal tightening subside, we should see payrolls pick up.”
There was nothing unusual in the data for last week and no states estimated claims, a Labor Department spokesman said as the figures were being released.
Economists’ estimates in the Bloomberg survey ranged from claims of 335,000 to 360,000. The Labor Department revised the previous week’s figure from an initially reported 354,000.
Stock-index futures held gains after the figures, with the contract on the Standard & Poor’s 500 Index expiring this month rising 0.4 percent to 1,614 at 8:36 a.m. in New York.
The four-week moving average, a less-volatile measure than the weekly figures, rose to 352,500 last week from 348,000.
Jobless claims, which track weekly firings, need to fall before job growth, measured by the monthly non-farm payrolls report, can accelerate. Employers in the U.S. added 165,000 jobs for a second month in May, according to the median forecast in a Bloomberg survey before tomorrow’s Labor Department report.
The number of people continuing to receive jobless benefits fell by 52,000 to 2.95 million in the week ended May 25. The continuing claims figure doesn’t include the number of Americans receiving extended benefits under federal programs.
The number of job seekers who have exhausted their traditional benefits and now are collecting emergency and extended aid increased by almost 34,000 to 1.76 million in the week ended May 18.
The unemployment rate among people eligible for benefits held at 2.3 percent in the week ended May 25, today’s report showed.
Thirty states and territories reported an increase in claims, while 22 reported a decline. These data are reported with a one-week lag.
Some companies are reducing headcount in response to weaker sales. Game developer Zynga Inc. will cut 520 jobs, 18 percent of its staff, and close offices in New York, Los Angeles and Dallas amid disappointing results. The cuts will save as much as $80 million, the San Francisco-based company said this week.
Other employers, including vehicle and equipment manufacturer Oshkosh Corp., are trimming headcounts as budget cuts take hold. The Oshkosh, Wisconsin, company anticipates declining defense contracts over the next few years, Chief Financial Officer David Sagehorn said, and will lay off workers this summer.
“It’s no secret that defense spending is heading lower, and sequestration has raised numerous questions and eyebrows across the U.S. in terms of the impact that that will have,” Sagehorn said at a May 29 conference. “Going forward, obviously, we will look at our footprint in the defense segment, and one of the big areas of focus for us is managing that overall cost structure as our sales in that segment are expected to decline over the next several years.”