Jobless Claims in U.S. Rise More Than Forecast to Six-Week High
Washington (Aug 15) Applications for unemployment benefits in the U.S. rose more than forecast last week, interrupting a steady decline to pre-recession lows.
Jobless claims climbed by 21,000 to 311,000 in the period ended Aug. 9, the highest in six weeks, a Labor Department report showed today in Washington. The median forecast of 48 economists surveyed by Bloomberg called for 295,000. There was nothing unusual in the data and no states were estimated, a spokesman said as the figures were released.
The jump represents a departure from a run of low readings that showed employers had been holding firm on staffing levels in order to keep up with demand. Federal Reserve Chair Janet Yellen is among policy makers who remain concerned that pockets of slack in the job market, including stagnant wages and elevated numbers of long-term unemployed workers, continue to hold back the world’s largest economy.
“We’ll probably see a bit of a give back from the sharp drop we’ve seen in the weeks before,” Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York, said before the report. “The underlying story on claims remains the same -- it’s one that’s fairly constructive and one that’s pointing to a labor market that’s finally, I would think, having lift-off.”
Estimates in the Bloomberg survey ranged from 286,000 to 315,000. The Labor Department revised the prior week’s reading to 290,000 from an initially reported 289,000.
The four-week average of claims, a less-volatile measure than the weekly figure, increased to 295,750 from 293,750 in the prior week that was the lowest since 2006. Last week’s average is still well below the 318,700 mean so far this year.
Another report today showed the cost of goods imported into the U.S. dropped 0.2 percent in July, the first decrease in three months, after rising 0.1 percent in June, according to Labor Department data. The drop was led by retreating costs for fuels and the biggest decrease for automobiles since 1992.
The number of people continuing to receive jobless benefits rose by 25,000 to 2.54 million in the week ended Aug. 2, today’s claims data showed. The unemployment rate among people eligible for benefits held at 1.9 percent during that period.
More muted firings typically pave the way for acceleration in job growth. Employers added more than 200,000 workers to payrolls in July for a sixth straight month -- the first time that’s happened since 1997. Employment rose by 209,000 after a 298,000 increase in June, and the jobless rate rose to 6.2 percent from an almost six-year low of 6.1 percent as more Americans entered the labor force seeking work.
Job openings rose in June to the highest level in more than 13 years, the Labor Department reported earlier this week.
Such strengthening in the labor market could drive the trend in claims down to about 275,000 a week by the end of the year, according to JPMorgan Chase & Co. Chief U.S. Economist Michael Feroli. While firings will probably stabilize near current levels, hopes of getting a job quickly may keep the recently unemployed from filing applications for benefits, Feroli said in an Aug. 7 note.
Improvement in the labor market is giving companies such as Choice Hotels International Inc. reason to be optimistic about its prospects.
The Rockville, Maryland-based hotel franchiser is “finally getting some cooperation from the economy,” including “strong employment gains,” Chief Executive Officer Stephen Joyce said on an Aug. 8 earnings call. “We like the types of positions that are growing fastest, and those sectors happen to share similar demographics with our customer base,” including technology, health care and service industries, he said.
The pickup in hiring also is keeping the Fed on track to end monthly bond-buying by year’s end. The policy-making Federal Open Market Committee announced July 30 that it would trim monthly asset purchases by another $10 billion, to $25 billion.
The central bankers repeated that they’ll probably reduce purchases in “further measured steps” while keeping interest rates low for a “considerable time.”
Fed Chair Janet Yellen has highlighted uneven progress in the labor market in making the case for further accommodation. A “strengthening” jobs picture still shows long-term joblessness at “exceptionally high levels,” she told lawmakers July 15.
Two-thirds of labor market indicators that Yellen has said she monitors to judge the health of the labor market haven’t yet returned to pre-recession strength. A still-elevated level of underemployment, decades-low workforce participation and a still-low number of workers secure enough to quit their jobs are among the gauges that remain weaker than 2004-07 averages.