Initial Jobless Claims and Existing Home Sales Worse Than Expected

Andrew Klips |

Less than 24 hours after the Federal Reserve said that it is going to begin scaling-back its asset purchases, known as QE3, in light of a series of upbeat economic reports in recent months, economic data hit Thursday morning that cast a bit of a cloud over the brightness of the economy.

Initial Jobless Claims at Highest Since March

The Labor Department said that initial jobless claims rose by 10,000 to 379,000 in the week ended December 14, reflecting seasonal fluctuations that often happen during the holiday season. Still, though, it was the highest level of new weekly filings for unemployment benefits since March.  Economists expected claims to drop to 336,000 for the week.

The spike in the last two weeks comes as a surprise as claims were as low as 305,000 just three weeks ago. 

The four-week moving average, which is regarded as a better gauge of the labor market because it irons out weekly volatility, increased to 343,500 from a revised 330,250 the week prior. Economists generally consider claims figures under 350,000 as a sign of modest growth in the jobs market. Especially at this time of year, it’s best to watch the one-month average because, as mentioned, the weekly figure can swing wildly.

Continuing Claims Also Increase

Continuing claims, or those people already collecting benefits on the state level, rose by 94,000 to 2.884 million in the week ended December 7.  Continuing claims do not include beneficiaries of extended or federal benefits and are reported at a one-week lag to initial claims.

Total claims, which count people receiving benefits across all programs, increased by 606,051 to 4.412 million for the week ended November 30. Total claims are reported at a two-week lag.

During the same week in 2012, the number of claims was 5.402 million.

Existing Home Sales Decline

In a separate report, the National Association of Realtors reported that sales of previously owned homes sunk 4.3 percent in November to an annualized rate of 4.9 million units, representing the third straight monthly decline, lowest annual rate since last December and first time the rate was under 5.0 million since April. Sales began slowing in September as the inventory of homes for sale remained tight and interest rates that began rising in May were creating a drag on the market.

Wall Street rallied hard on Wednesday following the announcement from the Federal Reserve, interpreting the news as an overall sign of strength in the nation’s economy. While the Fed may raise an eyebrow at these two reports as the housing and labor markets are two major barometers of the nation’s health, there are still only just that, two reports. Traders seem to be taking the news in stride with the Dow Jones Industrial Average up by 2 points, the S&P 500 down by 2 points and Nasdaq lower by 13 points in early afternoon trading.

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