First-time claims for jobless benefits fell last week to aone-month low, helping allay concern that the labor market maysuffer an extended setback.

Jobless claims dropped by 1,000 to 367,000 in the period endedMay 5, in line with the median forecast in a Bloomberg News surveyand the lowest since the end of March, the Labor Department saidtoday in Washington. The number of people on unemployment benefitrolls was the smallest since July 2008.

The data indicate the surge in claims in the first three weeksof April was probably tied to the timing of the Easter holidayrather than a deterioration in employment. Further declines indismissals would point to ongoing improvement in the job market,helping sustain household purchases after payrolls cooled lastmonth.

“Part of the reason we've seen consumer spending hold up isbecause we've stopped seeing a large amount of layoffs,” DrewMatus, senior U.S. economist at UBS Securities LLC in Stamford,Connecticut, said before the report. “The general trend in joblessclaims is lower.”

The latest week's figure compares with an average of 373,000claims since the end of February.

The median forecast of 47 economists surveyed by Bloombergcalled for 368,000 applications last week. Estimates ranged from345,000 to 380,000. The Labor Department revised the previousweek's figure from 365,000.

Stock-index futures held gains after the figure, with thecontract on the Standard & Poor's 500 Index expiring next monthrising 0.6 percent to 1,359 at 8:34 a.m. in New York.

Wider Trade Gap

Also today, Commerce Department figures showed the trade deficitwidened more than forecast in March as American demand for crudeoil, computers, automobiles and televisions propelled imports to arecord.

The gap grew 14 percent to $51.8 billion. The median estimate ofeconomists surveyed by Bloomberg called for an increase to $50billion. A 5.2 percent jump in imports, the biggest in more than ayear, swamped the 2.9 percent gain in exports, which also reached arecord.

The four-week moving average, a less-volatile measure than theweekly figures, decreased to 379,000 last week from 384,250 theprevious period.

The number of people continuing to receive jobless benefitsdropped to 3.23 million in the week ended April 28 from 3.29million. The continuing claims figure does not include the numberof Americans receiving extended benefits under federalprograms.

Those who've used up their traditional benefits and arecollecting emergency and extended payments declined by about 40,500to 3.04 million.

The unemployment rate among people eligible for benefits, whichtends to track the jobless rate, decreased to 2.5 percent in theweek ended April 28, from 2.6 percent. Thirty-five states andterritories reported a decrease in claims, while 18 reported anincrease. State data are reported with a one-week lag.

Initial jobless claims reflect weekly firings and tend to fallas job growth — measured by the monthly non-farm payrolls report —accelerates.

April Employment

American employers added fewer workers than forecast in Apriland the jobless rate unexpectedly fell as people left the laborforce, the Labor Department said on May 4. Payrolls climbed115,000, the smallest gain in six months.

At the same time, in markets where the labor market hasimproved, business is picking up.

“Although national job growth numbers have been uneven and a bitdisappointing over the past few months, we are seeing much improvedemployment trends in many of our markets,” Allan Merrill, presidentand chief executive officer of Beazer Homes USA Inc. in Atlanta,said in a May 2 earnings call.

“We are seeing many currently employed consumers who appeared tobe gaining confidence and are voluntary changing jobs to improvetheir employment circumstances,” he said. “This isn't necessarilypicked up in the job growth statistics, but we believe it is apositive turn.”

Federal Reserve policy makers said last month that there wasstill an “elevated” rate of joblessness in the U.S.

“Labor market conditions have improved in recent months; theunemployment rate has declined but remains elevated,” the FederalOpen Market Committee said in an April 25 statement. “The committeeexpects economic growth to remain moderate over coming quarters andthen to pick up gradually. Consequently, the committee anticipatesthat the unemployment rate will decline gradually toward levelsthat it judges to be consistent with its dual mandate.”

Bloomberg News

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