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US jobless claims at 312,000, in line with estimates; personal income rises

A job seeker fills out an application during a career fair at the Southeast Community Facility Commission in San Francisco, California.
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A job seeker fills out an application during a career fair at the Southeast Community Facility Commission in San Francisco, California.

The number of Americans filing new claims for unemployment benefits fell marginally last week, but continues to point to steadily improving labor market conditions.

Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 312,000 for the week ended June 21, the Labor Department said on Thursday. The prior week's claims were revised to show 2,000 more applications received than previously reported.

Economists polled by Reuters had forecast first-time applications for jobless aid dipping to 310,000 last week. A Labor Department analyst said there were no special factors influencing the state level data.

The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, rose 2,000 to 314,250 last week. With the labor market normalizing, there is probably little room for claims to drop much further. The declining claims suggest a recent streak of payroll job gains is likely to be sustained.

Data on job openings has also pointed to strengthening job growth. The economy has experienced four straight months of job gains above 200,000, a stretch last seen in early 2000.

The claims report showed the number of people still receiving benefits after an initial week of aid rose 12,000 to 2.57 million in the week ended June 14.

That covered the survey period for household employment from which the jobless rate is calculated. So-called continuing claims fell 52,000 between the May and June survey periods, suggesting scope for the unemployment rate to decline from a 5-1/2 year low of 6.3 percent.


Spending rises modestly

A separate report showed U.S. consumer spending rose less than expected in May, likely held back by weak healthcare spending, which could prompt economists to temper their second-quarter growth estimates.

The Commerce Department said consumer spending increased 0.2 percent after being flat in April. Spending, which accounts for more than two-thirds of U.S. economic activity, had been forecast rising 0.4 percent after a previously reported 0.1 percent dip in April.

When adjusted for inflation, consumer spending fell for a second straight month, suggesting spending this quarter could struggle to regain momentum after growing at its slowest pace in nearly five years in the first quarter.

Spending in May was probably constrained by weak healthcare spending as outlays on services barely rose for a second month.

While reports ranging from employment to manufacturing and the services industries suggest the economy has rebounded after sinking in the January-March period, the consumer spending data indicated that growth would probably fall short of the 4.0 percent annual pace that some economists are expecting in the second quarter.

Growth contracted at a 2.9 percent pace in the first quarter, the worst performance in five years.

Still, the economy is regaining strength enough for inflation to perk up, which should comfort Federal Reserve officials concerned about price pressures being too low.

A price index for consumer spending increased 0.2 percent in May, rising by the same margin for a third consecutive month. In the 12 months through May, the personal consumption expenditures (PCE) index was up 1.8 percent, the largest gain since October 2012. It had advanced 1.6 percent April.

Excluding food and energy, prices also posted a 0.2 percent gain. That followed a similar increase in April. The so-called core PCE index increased 1.5 percent from a year ago. That was the biggest increase since February last year and followed a 1.4 percent rise in April.

Both inflation measures still remain below the Fed's 2 percent inflation target. Inflation, which has been depressed by weak medical care costs and sluggish wage growth, is being watched for clues on the timing of the central bank's first interest rate hike.

The Fed, which is scaling back the amount of money it is pumping into the economy through monthly bond purchases, has kept its benchmark lending rate near zero since December 2008.

--By Reuters

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