By Shobhana Chandra
June 4 (Bloomberg) -- Fewer Americans filed claims for unemployment benefits last week, signaling the most acute phase of job losses may be over even as hiring has yet to pick up.
Initial jobless claims fell by 4,000 to 621,000 in the week ended May 30, in line with forecasts, from a revised 625,000 the prior week, the Labor Department said today in Washington. The number of people collecting unemployment insurance fell for the first time in almost five months, breaking a string of 17 consecutive records.
Fewer job losses lower the risk that consumer spending, the biggest part of the economy, will again retrench and delay an economic recovery later this year. Still, a report tomorrow may show unemployment topped 9 percent for the first time in more than 25 years, a sign the labor market will be one of the last areas to emerge from the slump.
“The downward trend we saw in claims in mid-March is holding solid,” Ellen Zentner, a Bank of Tokyo-Mitsubishi UFJ Ltd. senior economist in New York, said in a Bloomberg Television interview. “We’re on the cusp of a recovery in the U.S. economy.”
Jobless claims were projected to fall to 620,000 from 623,000 initially reported for the prior week, according to the median forecast of 43 economists in a Bloomberg News survey. Estimates ranged from 600,000 to 665,000.
Another report from Labor showed worker productivity rose more in the first quarter than previously estimated as the worst recession in at least half a century prompted companies to cut costs by extracting more output from remaining employees.
Stock-index futures rose after the reports. The contract on the Standard & Poor’s 500 index was up 0.4 percent at 935.3 as of 8:36 a.m. in New York. The yield on benchmark 10-year Treasury notes rose 7 basis points to 3.61 percent.
Productivity, a measure of employee output per hour, rose at a 1.6 percent annual rate, more than forecast, double the 0.8 percent gain estimated last month, revised figures from the Labor Department showed today. Labor costs increased at a 3 percent pace after climbing 5.1 percent at the end of 2008.
The four-week moving average of initial claims, a less volatile measure, climbed to 631,250 from 627,250.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 5 percent in the week ended May 23 after the prior week was revised down from 5.1 percent.
Twenty-five states and territories reported an increase in new claims for the week ended May 23, while 28 reported a decrease. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to rise as job growth -- measured by the monthly non-farm payrolls report -- slows.
The Labor Department’s payrolls report tomorrow may show employers cut more than 500,000 workers in May, according to the Bloomberg survey median, bringing total job losses since the recession began in December 2007, to 6.2 million. The unemployment rate probably jumped to 9.2 percent. The employment slump is the worst of any downturn in the post World War II era.
The bankruptcies of General Motors Corp. and Chrysler LLC are likely to ripple through the job market and the economy for months to come. GM this week said it’ll close 12 more plants by the end of 2011 under an accelerated plan to shut 30 percent of U.S. factories.
Sales have still not improved enough to prevent more firings. Deere & Co., the world’s largest maker of agricultural equipment, said this week it will furlough 494 workers at its operations in Ottumwa, Iowa, until demand improves.
The indefinite layoffs start June 29, and the remaining 195 workers will face periodic furloughs during the next several months, depending on market conditions, the Moline, Illinois- based Deere said.
“We have had to continue reducing employment and I’d say we will probably not be in a position to rehire until mid next year,” Jim Owens, chief executive officer of Caterpillar Inc. said in a May 31 interview on NBC’s “Meet the Press.” Caterpillar is the world’s largest maker of bulldozers and excavators.