US jobless claims fall to four-year low

Applications for jobless benefits dropped 30,000 to 339,000 in the week ended October 6, the fewest since February 2008, Labour Department figures showed today. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey. One state accounted for most of the plunge in claims, a Labour Department spokesman said as the data were issued to the press.

A decline in dismissals may mean employers are seeing enough demand to maintain current staff, a necessary first step to bigger gains in hiring. At the same time, a slowing global economy that is hurting exports and concern over looming changes in US  fiscal policy remain hurdles to a pickup in employment.

The report “is consistent with a labour market that is gradually getting better,” said Guy Berger, a US economist at RBS Securities Inc in Stamford, Connecticut, who had predicted a decline in claims. “Layoffs are at a low level and don’t seem to be going anywhere. Hiring is still very muted.”

Consumer confidence in the US held near a three-month high last week, with more Americans saying it was a good time to make purchases even as they grew more pessimistic about the economy, another report today showed. Stocks advanced, sending the Standard & Poor’s 500 Index higher for the first time in five days, on the drop in claims and as yields in Italian bonds dropped following that country’s sale of three-year securities.

Elsewhere yesterday, South Korea and Brazil cut interest rates as economies around the world shield themselves from the risk of a deeper slowdown driven by weakness in China and austerity measures in Europe. The trade deficit in the US widened in August as exports dropped for a second month, evidence of decreasing demand overseas, figures from the Commerce Department also showed. The gap grew 4.1 per cent to US$44.2 billion from US$42.5 billion in July.

Reuters