An unexpected drop in new claims for U.S. jobless aid hinted that
the country's battered labor market might be steadying, government data
showed on Thursday, although employment conditions remain very weak.
Job-shedding by U.S. companies helped bolster worker productivity in
the first quarter, according to a separate government report, as the
number of hours worked shrank by the steepest annualized pace since
U.S. chemical maker DuPont Co on Thursday said it would eliminate a
further 2,000 jobs under a cost-cutting plan to husband cash, but
economists said that in general, the worst of the big corporate layoffs
looks to be over.
The moderation in initial claims extends further, and is now well
into the range where it appears likely that we have seen the peak of
this business cycle, Goldman Sachs economists said in a note to
Higher same-store sales among 31 U.S. retailers in April also
indicated consumer confidence was rebuilding as people's fear of losing
their jobs abated.
Initial claims for state unemployment insurance benefits dropped to
a seasonally adjusted 601,000 in the week ended May 2 from a revised
635,000 the prior week, the Labor Department said. It was the lowest
reading since late January.
Analysts polled by Reuters had forecast 635,000 new claims versus a previously reported count of 631,000 the week before.
U.S. Treasury bond prices fell, helped by hopes of economic
recovery, and the dollar and stock market eased, with the Dow Jones
industrial average down 76 points at 8,436.
A deep U.S. recession has already cost over 5 million jobs since it
began in late 2007 and analysts expect the government's employment
report for April, due on Friday, will show that a further 595,000 jobs
were lost last month.
But there have been some scattered indications that labor market
conditions might be stabilizing, albeit at still very weak levels,
alongside other glimpses of hope that the severity of the recession may
The four-week average of new jobless claims, a better gauge of
underlying labor trends because it irons out week-to-week volatility,
fell for the fourth week in a row to 623,500 from 638,250 the week
before. This was the smallest reading since mid-February.
Economists expect the labor market will remain very depressed even
when growth begins to pick up, and the weekly report emphasized
conditions remain bleak for many Americans.
It's encouraging to see jobless claims numbers come down. There
were fewer new claims than expected. It's starting to signal some
stabilization in the labor markets, but claims are still very high,
said Gary Thayer, senior economist with Wells Fargo Advisors in St.
The number of people staying on the benefits roll after drawing an
initial week of aid rose 56,000 to a record 6.35 million in the week
ended April 25, the most recent week for which data is available.
Analysts estimated so-called continued claims would be 6.36 million.
Separately, the Labor Department said U.S. worker productivity
outside the farm sector grew at an annual rate of 0.8 percent in the
first quarter, after the number of hours worked fell faster than output
as firms cut back sharply on employment to protect profits.
Economists polled by Reuters expected non-farm productivity, which
measures the hourly output per worker, to increase at a 0.6 percent
pace, compared with a revised 0.6 percent drop the previous three
The Labor Department said worker hours shrank at a 9.0 percent rate
in the first quarter, the sharpest pace of decline since a 12.0 percent
drop in the first quarter of 1975.
Cuts in worker hours will help to shield corporate profits as
employers hunker down and wait for an economic upturn that U.S.
officials say will get under way later this year.
A crucial ingredient in the recovery will be stronger consumer
spending and higher-than-expected same-store sales among U.S. retailers
pointed in this direction.
Of the 31 retailers that reported April sales at stores open at
least a year, 64 percent topped Wall Street estimates and a handful
said they plan to report better first-quarter results than they had
According to Thomson Reuters revenue-weighted same-store sales
index, overall sales rose 1.2 percent, surprising analysts who expected
a decline of 0.2 percent.