The number of Americans filing new applications for unemployment benefits increased by the most in nearly 4-1/2 years last week, but the surge likely does not suggest a material weakening in labor market conditions, as the claims data are volatile around this time of year.
The larger-than-expected rise in initial weekly jobless claims reported by the Labor Department on Thursday reversed the sharp drop in the prior week, which had pushed filings to a three-year low.
Economists said adjusting the data for seasonal fluctuations is always a challenge during the start of the holiday season, and recommended focusing on the four-week moving average to get a better read of the labor market. The four-week average of claims suggested labor market conditions remained stable.
"The bulk of this week-to-week volatility is seasonal noise," said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets.
"On an underlying basis, nothing has changed, but if anything, we would have to say that initial claims are running slightly below the long-established trend, one of several data points that refutes (Federal Reserve) Chairman (Jerome) Powell's characterization of a shaky labor market."
Initial claims for state unemployment benefits jumped 44,000, the biggest increase since mid-July of 2021, to a seasonally adjusted 236,000 for the week ended December 6, the Labor Department said. Economists polled by Reuters had forecast 220,000 claims for the latest week.
The four-week moving average of claims, which irons out seasonal fluctuations, rose 2,000 to 216,750 last week. Economists continue to describe the labor market as being in a "no-fire, no-hire" state despite a raft of layoff announcements by large corporations, including Amazon.
"It's a little surprising that recent layoff announcements haven't translated into a shift higher in initial claims," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
"It may be that some workers who have lost their jobs have received generous severance packages or have found other employment, although that is more difficult in the current labor market with a depressed rate of hiring."
Stocks on Wall Street were trading mostly lower. The dollar eased versus a basket of currencies. U.S. Treasury yields fell.
The Fed on Wednesday cut its benchmark overnight interest rate by another 25 basis points to the 3.50%-3.75% range. The U.S. central bank has cut rates three times this year. Powell told reporters the labor market "seems to have significant downside risks," noting there was an overcounting of nonfarm payrolls, which policymakers believed was still persisting.
In September, the Bureau of Labor Statistics estimated 911,000 fewer jobs were created in the 12 months through March than previously estimated, the equivalent of 76,000 fewer jobs per month. The BLS will publish the final payrolls benchmark revision in February along with January's employment report.
The employment report for November, delayed by the 43-day government shutdown, will be released next Tuesday. It will incorporate October's nonfarm payrolls data. The unemployment rate for October, however, will not be available because the shutdown prevented the collection of data for the household survey, from which the jobless rate is calculated.
Source: Reuters