U.S. Unemployment Claims Rise Slightly

WASHINGTON — The number of Americans seeking unemployment benefits rose just 1,000 last week to a seasonally adjusted 308,000, hovering near six-year lows. Companies are still cutting very few jobs, however the decline in layoffs has not been accompanied by a pickup in hiring.

The less volatile four-week average for applications fell to 305,000, the Labor Department said Thursday. That's the lowest since May 2007, seven months before the recession began.

Weekly applications could increase next week because of the partial government shutdown. Defense contractors and other companies that do business with the government may temporarily lay off workers. Federal workers who are temporarily laid off may also file for benefits, though their numbers are reported separately and published a week later than the other applications.

Still, the broader trend has been encouraging. Applications, which are a proxy for layoffs, have fallen steadily in the past three months as many companies have stopped laying off workers. That suggests more employers are confident enough in the economy to maintain their existing staffs.

Steady declines in applications are typically followed by more hiring. But that hasn't happened. Instead, job gains have slowed in recent months.

"Companies were not laying off workers ahead of the shutdown but they probably weren't hiring much, either," Jennifer Lee, an economist at BMO Capital Markets, said.

Employers have added an average of just 155,000 jobs a month in the four months through August, according to government data. That's down from an average of 205,000 for the first four months of the year.

On Wednesday, payroll provider ADP said that businesses added just 166,000 jobs in September, evidence that hiring remains sluggish. The ADP figures usually diverge from the Labor Department's more comprehensive monthly employment report, which was scheduled to be released Friday. But the September employment report will now be delayed until the government shutdown ends.

The government was able to release the unemployment benefits report because the data are compiled by the states, unlike the jobs report data, which is gathered by federal workers. The unemployment benefits report also requires little additional analysis by federal officials, a department spokesman said.

About 4 million people received benefits the week ended Sept. 14, the latest data available. That's about 80,000 more than the previous week. A year ago, more than 5 million people were on the unemployment benefit rolls.

The economy may not be growing quickly enough to encourage companies to ramp up hiring. Most analysts forecast that growth has slowed to an annual rate of 1.5 percent to 2 percent in the July-September quarter, down from a 2.5 percent annual rate in the April-June quarter.

Economists predict that growth is rebounding to an annual rate of 2.5 percent to 3 percent in the current October-December quarter. But those forecasts were made before this week's impasse that shuttered the government. The shutdown could shave about 0.15 percentage points from the fourth quarter figure for each week it lasts.

Consumer Spending Rose Slightly in August

Consumers’ spending on goods and services rose 0.3 percent in August, the Commerce Department said on Friday. That is up from a 0.2 percent gain in July, which was slightly more than the 0.1 percent reported last month.

Income rose 0.4 percent in August, the best gain since February and up from a 0.2 percent July increase. Private wages and salaries rose 0.5 percent, while the government wages and salaries rose 0.2 percent.

The government figures would have been higher if not for forced federal furloughs that reduced wages and salaries by $7.3 billion.

Consumer spending drives 70 percent of economic activity. Many analysts say the increases are not enough to accelerate economic growth in the third quarter from the 2.5 percent annual rate in the April-June quarter.

“With more money coming in, consumers spent a little, just a little, more freely,” said Jennifer Lee, senior economist at BMO Capital Markets.

Americans grew more pessimistic this month about the economy, their own finances and government budget policies, according to a survey of consumer confidence released Friday.

The University of Michigan says its final reading of consumer sentiment dropped to 77.5 in September from 82.1 in August. It was the second straight decline after confidence reached a six-year high of 85.1 in July.

Paul Ashworth, chief United States economist at Capital Economics, predicts the economy is growing at an annual rate of 2 to 2.5 percent in the July-September quarter. Still, the pickup in August spending could signal stronger growth in the final three months of the year.

But other economists are less hopeful. Peter Newland, an economist at Barclays, said that the modest increase did not change Barclays’ forecast for growth, at a 1.7 percent rate.

There are some signs that consumers may be better positioned to step up spending soon.

The number of people seeking unemployment benefits has sunk to its lowest point in six years because few companies are laying anyone off anymore. That has led some economists to predict that employers added 200,000 jobs or more jobs in September, the most since February.

Number of Jobless People Declines Slightly in Europe

PARIS — While unemployment remained at record levels in percentage terms, the actual number of jobless people in the euro zone fell slightly in July, according to data published on Friday, offering fresh evidence that Europe’s struggling economy was taking tentative steps toward a recovery.

The tiny improvement in employment — which came alongside declining inflation and a survey showing improved confidence among European consumers and business managers — was welcomed as additional evidence that the worst of the region’s downturn was probably over. Still, officials and economists cautioned that the economic health of Europe remained fragile and the pace of recovery highly uneven within the region, underscoring the challenge for policy makers and central bankers.

“The recent improvements are minimal,” said Laszlo Andor, the European Union’s commissioner for employment. “This is no time for celebration or complacency.”

The jobless rate in the 17 countries that share the euro was 12.1 percent in July, adjusting for seasonal effects, according to a report from Eurostat, the European Union statistics agency. That figure has remained unchanged for several months. A year earlier, it was 11.5 percent.

Eurostat estimated that 19.2 million people in the euro area were jobless in July, 15,000 fewer than in from June.

For all 28 countries in the European Union, the number of unemployed fell by 33,000, to 26.7 million, for a rate of 11 percent. The European bloc expanded from 27 members to 28 on July 1, when Croatia joined.

Joblessness in the euro zone has been marching higher almost without interruption for more than five years, declining only briefly at the beginning of 2011. The July data showed the first back-to-back monthly decline in the number of jobless since April 2011.

But while some countries, like Germany, Austria and the Netherlands, have managed to weather the crisis with relatively little human cost, their Southern European neighbors — crippled by the euro zone’s debt crisis — still confront devastating levels of joblessness, particularly among the young.

“Against the background of what we’ve seen over last 18 months, yes, this is good news,” Carsten Brzeski, an economist at ING Bank in Brussels, said of the employment figures. “But tell that to the people who are still unemployed in places like Spain.”

The figures released on Friday again demonstrated the large disparity in growth and unemployment rates.

Unemployment in Germany stood at 5.3 percent in July, while Austria’s rate was 4.8 percent — less than one-fifth the levels recorded in Greece and Spain.

Andrea Broughton, principal research fellow at the Institute for Employment Studies in Brighton, England, emphasized the high levels of youth unemployment in many parts of Europe. In Greece, where the jobless rate is already among Europe’s highest at nearly 28 percent, youth unemployment was 62.9 percent in May, the latest month available for that country. In Spain and Croatia, more than half the young people remain out of work.

Nonetheless, Mr. Brzeski of ING said there were growing signs that Europe’s downturn had bottomed out and that structural reforms introduced in Spain, Portugal and other pockets of Europe’s “periphery” had begun to bear fruit.

He pointed to the European Commission survey of business and consumer confidence for August, which was also released on Friday, showing that optimism among company managers had reached its highest level in two years.

“Unit labor costs in many peripheral countries really have been improving,” he said. There was a nascent sense among businesses in those countries, he added, that “finally, something has been done and it’s showing some effect.”

The confidence survey, conducted by the executive agency of the European Union, showed that sentiment was improving not only in relatively healthy economies like Germany and the Netherlands but also in Italy and Spain, which have been among the hardest hit by the downturn.

The index of sentiment within the euro zone, based on factors including business orders, industrial confidence and hiring plans, rose 2.7 points to 95.2, the European Commission said. Across the European Union, the measure rose 3.1 points to 98.1.

Consumer confidence also improved, thanks mainly to brighter expectations about the economic situation over the next 12 months. Expectations about employment, however, remained unchanged.

Europe’s stagnant economy continued to keep a lid on prices. Eurostat on Friday forecast that annual consumer price inflation would decline to 1.3 percent in August from 1.6 percent a month earlier, largely because of a drop in energy prices.

This low-inflation trend, economists said, provides useful ammunition to the European Central Bank, which remains reluctant to raise its benchmark interest rate from a record low of 0.5 percent.

“As long as inflation remains well behaved and clearly below 2 percent,” Mr. Brzeski said, “I think the E.C.B. can sit very comfortably where it is right now.”

Markets End the Week Slightly Higher

Stocks on Wall Street closed slightly higher Friday following a slew of mixed earnings reports, and despite fears that an overhaul of China’s industry could slow down the world’s second-largest economy.

By the end of trading the Standard & Poor’s 500-share index and the Dow Jones industrial average were up less than 1 percent, and the Nasdaq composite was 0.2 percent higher.

Amazon.com reported a loss for the second quarter, but shares rose 2.9 percent.

Beijing has ordered companies to close factories in 19 industries where overproduction has led to price-cutting wars, affirming its determination to push ahead with a painful makeover of the economy. That move followed weak manufacturing data on Wednesday. China’s Shanghai Composite dropped 0.5 percent to 2,010.85.

In Europe, Britain’s FTSE 100 index ended the day down 0.5 percent to 6,554.79 points, while Germany’s DAX fell 0.7 percent to 8,244.91.

France’s CAC 40 bucked the trend, rising 0.3 percent to 3,968.84. It was bolstered by a 3.6 percent rise in the shares of LVMH, the luxury goods maker, after it reported higher earnings. Meanwhile, shares in French media company Vivendi were up 0.6 percent after it agreed to sell most of its majority stake in video games maker Activision.

Over all, trading has been quiet in recent days as a lot of people wait for next week’s meeting of the Federal Open Market Committee in the for guidance on when the central bank will start reducing its monetary stimulus.

Since late last year, the Fed has been buying $85 billion in Treasury and mortgage bonds a month — a move that has kept long-term rates near record lows and supported economic recovery.

In Asia, Japan’s Nikkei 225 index fared worst on Friday, closing 3 percent lower at 14,129.98, due to a big rise in the yen, which risks making the country’s exports less competitive on international markets.

Japan on Friday said consumer prices rose in June for the first time in more than a year, an early sign that the government’s stimulus policies are working. While that is a promising sign in the long-term, the signs of inflation suggest interest rates could eventually increase — higher rates tend to strengthen a national currency. The dollar was down 0.9 percent against the yen, at 98.34 yen.

Elsewhere in the region, Hong Kong’s Hang Seng gained 0.3 percent and Australia’s S&P/ASX 200 rose 0.1 percent.

In energy trading, benchmark crude was down 79 cents at $104.70 a barrel in electronic trading on the New York Mercantile Exchange.

Wholesale Inventories Rise Slightly

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March Retail Sales Rise Only Slightly

Retailers reported that a benchmark sales figure rose slightly during the month, as shoppers held back on spending because of cold weather across the nation, particularly in the Midwest and East Coast, and continued fears about the economy.

Retail analysts and industry executives, however, said they expected sales to pick up in April.

According to a preliminary tally of 15 retailers by the International Council of Shopping Centers, sales in stores open at least a year rose 1.4 percent in March, or 2.2 percent excluding drugstores. That was below expectations, said Michael Niemira, chief economist at the council.

Sales in stores open at least one year is a prime measure of a retailer’s financial health, because it excludes stores that open or close during the year.

Weather was a factor, with March being the coldest in seven years. The comparison with March 2012 was especially tough, since last year had the warmest March on record, according to Planalytics, a weather research firm.

“Wintry weather conditions persisted deep into March, depressing spring apparel, home and garden and seasonal merchandise sales,” said Ken Perkins, president of Retail Metrics. At the same time, the payroll tax increase that took effect in January and the uncertain economy have weighed on spending, he said.

Analysts often like to combine March and April to get a clearer picture of shoppers’ habits, because of volatile weather patterns at that time of year and the effect of the Easter holiday, which moves around the calendar.

Mr. Perkins said he expected April to be stronger, as the weather improves and customers respond to strong fashion trends such as colorful jeans and prints. An earlier Easter, which meant one fewer selling day in March if stores were closed or a low-sales day if they stayed open, will also help April results, he said. In addition, shoppers should benefit from tax refunds and falling gas prices.

The number of retailers reporting monthly sales has been shrinking. Big names like Target, Macy’s and Nordstrom have recently stopped reporting. Wal-Mart, the world’s largest retailer, has not reported monthly sales in several years.

With the shrinking list, Costco Wholesale, which posted a 6 percent sales gain in February, now accounts for about two-thirds of the revenue in the tally. In total, the retailers that report monthly data represent about 6 percent of the $2.4 trillion in retail industry sales.

A clearer picture of retail sales will emerge when the government reports retail sales figures on Friday. Costco Wholesale’s sales rose 4 percent in March, short of analysts’ expectations for a 5.2 percent rise.

TJX, which operates TJX and Home Goods stores, said revenue in stores open at least a year fell 2 percent, while analysts expected a 1 percent drop. The company said that the drop was a result of the weather and the Easter shift, and that they expected a stronger April.

“Overall business trends improved as the weather became warmer,” TJX’s chief executive, Carol Meyrowitz, said. “April is off to a good start.”

L Brands, formerly Limited Brands, the parent of Victoria’s Secret and Bath and Body Works, said their revenue figure was flat, above the drop expected by analysts.

Gap said its sales fell 1 percent, a smaller drop than the 2.1 percent analysts expected. The company said the earlier Easter had hurt results.