New claims for unemployment benefits fell to a fresh four-year low last week, according to a government report that showed ongoing healing in the labor market.
Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 359,000, the lowest level since April 2008, the Labor Department said on Thursday.
The report included revisions for claims data from 2007 based on updated seasonal adjustment calculations. New seasonal adjustment factors were also introduced for 2012.
The prior week’s figure was revised up to 364,000 from the previously reported 348,000. Economists polled by Reuters had forecast a claims reading of 350,000 for last week.
The four-week moving average for new claims, a measure of labor market trends, declined 3,500 to 365,000.
The economy expanded as expected in the fourth quarter while personal income grew at a much faster pace than previously thought, which should help underpin spending this quarter.
Gross domestic product increased at a 3.0 percent annual rate, the quickest pace since the second quarter of 2010, the Commerce Department said in its final estimate on Thursday, unrevised from last month’s estimate.
That was in line with economists’ expectations. The economy grew at a 1.8 percent rate in the third quarter.
However, personal income was $13.162 trillion at a seasonally adjusted annual rate, $3.3 billion more than previously reported. Disposable income was $10.6 billion more than previously thought, likely reflecting the strengthening labor market.
Gross domestic income, which measures output from the income side, increased at a 4.4 percent rate – the fastest since the first quarter of 2010 – from a 2.6 percent rise in the third quarter.
The department also said after-tax profits increased at a 1.1 percent rate, slowing from 2.7 percent the prior quarter. The slowdown in profits reflects the increase in wage costs as companies step up hiring.
Rising incomes should help to cushion consumer spending against surging gasoline prices. Spending, which accounts for about 70 percent of U.S. economic activity, grew at an unrevised 2.1 percent pace in the fourth quarter.
European stocks and U.S. index futures fell and the yen strengthened as earnings missed estimates and Standard & Poor’s said Greece may have to restructure its debt again. Spanish and Italian bonds dropped.
The Stoxx Europe 600 Index (SXXP) lost 0.9 percent at 8:43 a.m. in New York. S&P 500 Index futures slipped 0.4 percent, extending declines as jobless claims topped estimates. The Hang Seng China Enterprises Index slid 1.6 percent. The yen appreciated against all 16 of its most-traded peers. The yield on Spain’s 10-year bond climbed 11 basis points. Ten-year Treasury yields fell three basis points to 2.17 percent. Oil sank 0.5 percent.
Hennes & Mauritz AB, Europe’s second-largest clothing retailer, and PICC Property & Casualty Co., China’s biggest non- life insurer, reported lower-than-estimated earnings. More than $5.6 trillion has been added to the value of global equities this quarter as stocks post the best start to a year since 1998 on signs of sustained economic recovery in the U.S. and efforts to contain Europe’s debt crisis.
Best Buy Co. Inc. BBY -3.64% said on Thursday that its adjusted fiscal fourth-quarter operating profit rose to $1.33 billion, or, or $2.47 a share, compared to $1.28 billion, or $1.98 a share a year ago. Revenue rose to $16.73 billion, from $16.26 billion a year ago. Analysts polled by FactSet Research had expected the company to earn $2.15 cents a share on revenue of $17.18 billion. Including items, the firm said it lost $1.7 billion, or $4.89 a share. The company also said it will close 50 of its U.S. big box stores and cut 400 jobs. It said the moves and other restructuring efforts should save it $800 million by 2015. Best Buy said it expects to earn $2.85 to $3.25 a share in fiscal 2013.