WASHINGTON (Reuters) - The number of Americans lining up for new jobless benefits fell last week for the first time since April, a hint that a slowdown in hiring last month may only be temporary.
The data on state unemployment claims, released by the Labor Department on Thursday, takes some of the edge off a report by the government last week that showed job creation slowed sharply in May.
Many economists believe mild weather in the winter led employers to hire more workers then at the expense of spring, but the weather effect should be temporary. Some economists suggested the claims data backed that view.
It “gives us more confidence that the trend in payrolls is stronger than the May payroll data implied,” UBS said in a note to clients.
Four consecutive months of slowing job creation had fueled speculation the Federal Reserve would ramp up efforts to prop up the U.S. economy.
However, in congressional testimony on Thursday, Fed Chairman Ben Bernanke offered few hints that further monetary stimulus was imminent, even though he said the U.S. central bank was ready to shield the economy if financial troubles mount.
The Labor Department said initial claims for state unemployment benefits dropped by 12,000 to a seasonally adjusted 377,000 last week. That was spot on the median forecast in a Reuters poll.
“If the economy were really swooning because of events in Europe, it should be accompanied by a backup in jobless claims,” said Carl Riccadonna, an economist at Deutsche Bank in New York.
Prior to last week, claims had risen for four consecutive weeks, adding to concerns over several months of lackluster hiring data. While the United States emerged from a deep recession three years ago, the jobless rate has remained stubbornly high. In May, it edged up to 8.2 percent.
Still, most of the recent increases in new jobless claims were marginal, and the overall level of new aid applications has held at levels consistent with a modest labor market recovery.
“I think the Fed looks at it and certainly leaves the door open for further action, but it is not a ringing bell that it should take action right now,” said Peter Jankovskis, an investment officer at Oakbrook Investments in Lisle, Illinois.
U.S. stock prices pared gains following Bernanke’s comments, but remained in positive territory, with sentiment bolstered by a decision by China’s central bank to cut bank lending and deposit interest rates.
Last week’s decline in U.S. jobless claims was the first drop since the week ended April 28. The four-week moving average for new claims, a measure of labor market trends, increased by 1,750 last week to 377,750.
The government said on Friday that job growth slowed in May for the fourth straight month, heightening concerns that the deepening debt crisis in Europe and a slowdown in China were starting to dampen an already lackluster U.S. recovery.
Bernanke said the hiring slowdown could reflect the warm winter weather or, more troublingly, suggest the economy was simply growing too slowly to make a big dent in unemployment.
A separate report from the Fed showed American families continued to shed debt in the first quarter. Efforts by U.S. households to dig out of a big debt pile have been a persistent headwind for the economy.
Total household debt dropped for the 16th straight quarter, declining at a 0.4 percent annual rate. Mortgage debt, which is the biggest component of consumer debt, fell at a 2.9 percent annual rate, while consumer credit rose by 5.8 percent during the quarter. A separate Fed report pointed to some shakiness in borrowing, with consumer credit expanding in April by the least in six months.
On a brighter note, the Fed said household wealth increased by $2.8 trillion during the period, largely because of higher prices in the stock market. That extra wealth could help families feel a little more comfortable spending money, which in turn could help the economy.
Additional reporting by Rodrigo Campos in New York; Editing by Andrea Ricci, Chizu Nomiyama, Leslie Adler and James Dalgleish