The number of people filing first-time unemployment claims jumped
more than expected last week, challenging a rising hope that layoffs
were on their way down and that the labor market was on the road to
The U.S. Labor Department said initial jobless
claims, a closely-watched measure of layoffs, jumped to 637,000 for the
week ended May 9th. This was up 32,000 from the previous week's revised
total of 605,000.
Going into this week's data, jobless claims had
dipped in 4 of the previous 5 weeks, sliding to a 3-month low. While
the number had largely been expected to tick up after the recent
declines, there had been some hope that the figure would dip below the
600,000 mark - indicating that layoffs have continued to moderate.
on the recent slide in jobless claims, a belief had begun to form that
companies had halted the bulk of their layoffs. While firms were still
reluctant to hire, a halt in layoffs was seen as a first step of
getting the labor market back on solid ground.
The 4-week moving
average for initial claims, a statistic that flattens out week-to-week
fluctuations in the data, rose to 630,500 compared to a revised reading
of 624,500 in the previous week.
The rise in the 4-week moving
average is evidence that the downward trend in jobless claims has
halted. This was the first increase in the statistic since it hit its
high of the cycle about a month ago.
The number of people
receiving ongoing unemployment help, a figure known as continuing
claims, rose more than 200,000 to reach another record high.
claims totaled 6.560 million for the week ended May 2nd, the most
recent week for which the government has data. This was up 202,000 from
the previous week - the 15th consecutive week in which continuing
Mitigating the disappointment is the belief that the
layoffs were concentrated in the automaking industry, where the
likelihood of job losses was already well known.
equity strategist at Miller Tabak, pointed out that the auto producing
states accounted for the biggest rise in claims, where Chrysler has
halted all production and GM has trimmed its output. Boockvar noted
that the rise in continuing claims is evidence of the still reluctance
on the part of business to hire but the level of firing has stabilized.
Last week, the government reported less-than-expected job losses for
April, bolstering hope that the massive job losses could be moderating.
The report still showed 539,000 jobs lost in the month and included an
unemployment rate that rose to 8.9%. But many had felt that this, along
with the recent claims number, could point to signs of stabilization in
the labor market.
The employment situation was considered
fragile, however, and the newest jobless claims data could spark
concern that the previous hope might have been premature.
Low, economist for FTN Financial, said that following disappointing
retail sales released earlier this week, the jobless claims increase
is likely to be viewed as another withered green shoot of an economic
On Wednesday, a government report showed that retail
sales unexpectedly dropped for April, falling by 0.4%. This was more
moderate than the 1.3% fall in the previous month, but economists had
been expecting a rise of 0.1%.