The weekly report from Washington, D.C. showed that the number of people applying for first-time jobless benefits last week swelled more than expected, reaching its highest level in two months.
The Labor Department reported that initial jobless claims – a barometer of the number of layoffs – for the week ended July 6 increased by 16,000 to 360,000 from an upwardly revised 344,000 the week prior. The agency had originally estimated the prior week’s claims at 343,000.
Economists were quite mixed in expectations, with some pegging the increase and most underestimating it. Consensus predictions were in the area of 344,000 filings.
There was nothing unusual in the data and no states estimated claims last week, according to the Labor Department
The four-week moving average, closely watched as a gauge of jobless trends because it smoothes weekly volatility, was 351,750, up by 6,000 from the previous week’s revised average of 345,750 (revised down from an original 346,250). Economists typically regard figures below 350,000 as a sign of moderate growth in the labor markets.
It’s notable the July is typically a volatile month as auto manufacturers go through shut-downs for maintainence. However, this year is a bit different with Ford Motor Co. (F) trimming its shutdown from two to one week and Chrysler mostly forgoing shutdowns. General Motors Co. (GM) has done a shutdown in four years since filing bankruptcy.
For the week ended June 29, continuing claims – those people already collecting benefits, not including those receiving extended benefits under federal programs – rose to 2.977 million from 2.953 million the week prior. Continuing claims are reported with a one-week lag compared to initial claims.
The total number of Americans receiving benefits across all programs in the week ended June 22 declined to 4.506 million from 4.558 the prior week. In the comparable week of 2012, total claims equaled 5.874 million. Total claims are delivered at a two-week lag.
The biggest increases in initial claims for the week ending June 29 were in New Jersey (+6,068), New York (+2,824) and Connecticut (+2,802). The largest decreases were in California (-9,323), Florida (-3,245) and Pennsylvania (-2,628).
The markets are on the rise this morning, in part because of dovish commentary from the Federal Reserve on Wednesday that signaled interest rates will be held at ultra-low levels and some disagreements amongst Fed officials about when to taper its massive monetary stimulus package. The worse-than-expected jobs report adds fodder to bulls believing that the Fed will hit the brakes on buying Treasuries and mortgage-backed securities later, rather than sooner.
As such, the Dow Jones Industrial Average is up by 136 points in early Thursday action. The S&P 500 is up 16 points and the Nasdaq has risen 34 points.