Weekly Jobless Claims Unexpectedly Shoot Up to 'Worrisome' Level
Another day, another piece of bad election-year news for proponents of Bidenomics.
The Department of Labor on Thursday released its weekly report of seasonally adjusted data on new unemployment claims through May 4, reporting a total of 231,000 jobless claims.
That number was both up from the previous week’s 209,000 and higher than the 214,000 claims Dow Jones had anticipated, according to CNBC.
In fact, it was the highest number since August, spurring CNBC to label the report “a potential sign that an otherwise robust labor market is changing.”
Continuing jobless claims were up 17,00o from the week prior, while the four-week moving average of claims also showed an increase, up 4,750 week-to-week.
“Weekly jobless claims are one of the timeliest indicators of when the economy is starting to undergo serious deterioration, and the magnitude of new layoffs this week looks worrisome,” Christopher Rupkey, chief economist at FWDBONDS, told CNBC.
“One week does not a trend make, but we can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication,” he added.
Nonfarm payrolls were expected to rise by 240,000 in April, but only increased by 175,000, the report also said — the smallest month-to-month rise since October.
Not all the news was bad, however. The unemployment rate “inched up” from 3.8 to 3.9 percent, for example, meaning that it has stayed below 4 percent for over two years — “the longest such streak since the 1960s,” according to The Associated Press.
Also, as Reuters noted, a slowing labor market makes additional interest rate cuts by the Federal Reserve somewhat more likely.
The outlet reported that a “handful of economists” expect to see the first rate cut in July, but most don’t think the Fed will act before September.
Some of the numbers should probably be taken with a grain of salt at this time of year, according to one expert who talked with Reuters.
“Given that the varied timing of school spring breaks, and holidays like Easter and Passover, makes the seasonal adjustment process very complicated, we often see volatile readings in the seasonally adjusted data around this time of year,” JP Morgan economist Daniel Silver told the outlet.
Over 10,000 of the new claims came from New York alone, prompting speculation that much of that volume could be attributed to Citigroup employees who had been laid off in January but paid 90 days of severance finally becoming eligible for unemployment insurance benefits in April.
Reuters noted that California, Illinois, Indiana and Texas also saw large increases in new unemployment claims, but only one state — Iowa — saw claims drop by more than 1,000.
Stocks initially fell after the report, but by late morning had more than rebounded. The Dow Jones Industrial Average was up nearly half a point by about 11:30.
The AP said strong consumer spending was responsible for preventing a recession and keeping American jobs “plentiful.”
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