U.S. Jobless Claims Remain Elevated
The number of Americans who applied for jobless benefits remained elevated for the third straight week, suggesting potential weakening in the U.S. labor market. Jobless claims fell by 1,000 to a seasonally adjusted 388,000 in the week ended April 21, the U.S. Labor Department said Thursday.
Claims from two weeks ago were revised up to 389,000 — the highest level since the first week of January — from an original reading of 386,000.
The level of claims is a rough gauge of whether layoffs are rising or falling. Economists surveyed by MarketWatch had projected claims would fall to 375,000 in the latest week. Many believe the spike in April largely stems from spring break — when school workers can file for temporary benefits — and a late Easter holiday.
Yet expectations that claims would resume a downward trend that began last fall have so far failed to materialize. Claims are 7% higher compared to early February’s four-year low of 361,000. What’s more, a string of recent data suggesting some softening in the economy has raised concerns about whether the recovery will accelerate in the months ahead.
A downturn in Europe could hurt U.S. exports, for instance, and higher gas prices could be a drag.
The government’s method for seasonally adjusting the data has also come into question. Some economists believe the adjustments exaggerated the drop in claims earlier in 2012, contributing to the recent increase as the data are smoothened out.
“As we continually note, the recent rise in claims appears to reflect imperfect seasonal adjustment rather than a marked deterioration,” said economist Jeffrey Greenberg of Nomura Securities. “The rise should not be taken as a sign that there is fundamental weakening in the labor market.”
Yet others say the recent run of higher claims data may signal some actual slippage. “Initial claims failed to decline as expected in the latest week, suggesting recent increase goes beyond seasonal adjustment distortions,” economists at Goldman Sachs wrote in a report.
A clearer picture of the labor market will emerge next week with the April employment report. The Labor Department is expected to announce that 193,000 jobs were created, according to the latest MarkeWatch forecast.
Any number sharply below market expectations would intensify concerns about another slowdown in hiring, especially after a disappointing increase of 120,000 in March, based on a preliminary estimate.
Meanwhile, the average of new claims over the past four weeks climbed by 6,250 to 381,750, matching the first week of January as the highest level of the year. The four-week average reduces seasonal volatility in the weekly data and is seen as a more accurate barometer of labor-market trends.
Also Thursday, the Labor Department said continuing claims increased by 3,000 to a seasonally adjusted 3.32 million in the week ended April 14. Continuing claims, which reflect people already receiving benefits, are handled by the states and typically last six months.
About 6.68 million people received some kind of state or federal benefit in the week ended April 7, down 87,160 from the prior week. Total claims are reported with a two-week lag.