FXstreet.com (Barcelona) - The amount of laid off workers who applied for unemployment benefits for the first time has grown larger than expected in the week of December the 15th, to reach their highest level in more than a year.
The volume of initial jobless claims increased by 12 K to 346,000, from the previous week revised figure of 334,000. The four week average has increased by 4,250 to 343,000 from 338,750 unrevised average last week. This latest increase is well above the expectations, as market analysts had advanced a 2k increase on the week.
Initial claims have reached now oone of the highest levels in the last years, according to Ian Shepherdson, Chief U.S. Economist at High Frequency Economics, Ltd: Claims are now at their highest level since the week of Thanksgiving last year, when seasonal problems lifted the number. Such distortions and the Katrina effect aside, you have to go back to the spring of 2004 to find the last time claims were sustained at this level.
Continuing claims advanced by 12 k to 2,646,000 in December the 8th week, form revised 2,634,000 claims on the previous weeks.
Such a high level of claims will translate into a sharp decrease on payroll growth, and according to Ian Shepherdson it could a growth close to none in payrolls: The increase is now big enough to suggest we should see a meaningful slowdown in payroll growth in December; we look for 50K or less. If claims keep rising, payrolls closer to zero will soon become a real possibility. Companies' behavior is fundamentally changing; a hiring freeze is no longer enough.