RTTNews - 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 stability.
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.
Based 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.
Continuing 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 claims rose.
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.
Peter Boockvar, 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.
Chris 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 recovery.
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%.
For comments and feedback: contact firstname.lastname@example.org