More Americans Filed Jobless Claims Last Week Than Forecast
More Americans than forecast filed for unemployment benefits last week, representing a pause in the pace of labor-market improvement.
Jobless claims climbed by 15,000 to 297,000 in the week ended July 4, the highest since February, a Labor Department report showed July 9. The median forecast of economists surveyed by Bloomberg News projected claims of 275,000. The data can be volatile this time of year because of the Fourth of July and seasonal auto plant shutdowns.
Applications for benefits have been below 300,000 for 18 straight weeks, the longest stretch since 2000 and indicating companies are content to maintain staffing levels. Stronger demand probably would help persuade employers to boost hiring and assure employers about the U.S. outlook in the face of weaker economies abroad.
The holiday and seasonal shutdowns “always create some volatility,” said Tom Simons, a money market economist at Jefferies in New York, whose forecast for 290,000 initial claims was among the closest in the survey. The level of claims still “suggests the labor market slack is continuing to decline and conditions are tightening overall.”
Estimates from 48 economists ranged from 260,000 to 290,000. Claims in the prior week were revised to 282,000 from an initial reading of 281,000.
The four-week average of claims, a less-volatile measure than the weekly figure, increased to 279,500 from 275,000 the week before.
The number of people continuing to receive jobless benefits rose by 69,000 to 2.33 million in the week ended June 27.
In that same period, the unemployment rate among people eligible for benefits held at 1.7%.
The Labor Department’s data showed a 9,799 increase in claims filed at Michigan employment agencies and a 3,205 pickup in Ohio.
The timing and extent of closings to retool auto factories for the new model year is typically difficult for the government to gauge, causing claims to gyrate at this time of year. It probably will take several weeks for the data to stabilize enough to signal whether firings truly are ebbing.
“We have no reason at all to think that the underlying trend in claims has changed and once the shutdowns are over we’d expect claims to revert to 280K or so,” Ian Shepherdson, chief economist at Pantheon Macroeconomics Ltd. in Newcastle, England, said in a note to clients.
Ford Motor Co. said early last month that it planned to shorten summer vacation for workers at 14 North American factories to meet growing demand for sport-utility vehicles and its new aluminum-body F-150 pickup.
To churn out an extra 40,000 vehicles, Ford said it would cut the second half of a planned two-week break that started June 29, according to an e-mailed statement.
Federal Reserve policymakers are monitoring measures of labor market slack as they consider moving their benchmark interest rate off its near-zero level, where’s it’s been since December 2008.
U.S. central bankers in June saw the economy moving toward conditions that would support an interest-rate increase, while also expressing concern about weak consumer spending and risks from China and Greece that have since intensified.
Policymakers “saw economic conditions as continuing to approach those consistent with warranting” tighter monetary policy at some point, according to minutes of their June 16-17 meeting released July 8 in Washington. All but one “indicated that they would need to see more evidence that economic growth was sufficiently strong.”
Employers added 223,000 jobs last month even as wages stagnated and the size of the labor force receded, according to Labor Department data. The jobless rate fell to 5.3%, the lowest level in seven years.
Initial jobless claims reflect weekly firings and typically decrease before job growth can accelerate. Many layoffs now reflect company- or industry-specific causes, such as cost-cutting or business restructuring.
Microsoft Corp. plans to cut as many as 7,800 jobs and write down about $7.6 billion on its Nokia phone-handset unit, the company said in a statement July 8. The latest round of cuts comes a year after Microsoft said it would let go of 18,000 employees and less than two weeks after the company announced plans to exit the Web display advertising business. Microsoft had about 120,000 employees at the end of March.
