Initial Jobless Claims Rise 18,000 to 354,000 Last Week

More people in the United States than expected filed for jobless benefits for the first time last week, according to the weekly report from the Labor Department Thursday. This added to bearish pressures on the markets following a 206-point nosedive on Wednesday after Fed Chairman Ben Bernanke commented that tapering of monetary easing could begin this year.

The Labor Department reported that initial jobless claims for the week ended June 15 rose from a revised 336,000 (up from 334,000) the week prior to 354,000. Claims the week prior were near five-year lows.

Economists were expecting claims to rise, but only to 339,000.

The four-week moving average, a less-volatile measure of the labor market, increased by 2,500 to 348,250 from an upwardly revised 345,750 (from an original 345,250). Economists generally regard claims at 350,000 as a sign of moderate growth in the jobs market.

No states were estimated and there was nothing unusual in the latest data, according to the Labor Department.

Continuing claims, or those people already receiving state benefits, edged down to 2.951 million from 2.991 million for the week ended June 8. The total number of people collecting benefits in all government programs, including extended benefits from the federal government, rose to 4.534 million from 4.515 million in the week ended June 1.

The largest weekly advance in claims came from Pennsylvania (+5,214), Illinois (+3,364) and Texas (+3,007). The biggest weekly declines came from California (-1,209), Kansas (-404) and Nebraska (-314).

The jobs figures have been closely monitored because of the direct relationship to the Federal Reserve tapering or ending its third iteration of quantitative easing that consists of ultra-low interest rates and $85-billion-per-month in purchases of Treasuries and mortgage-backed securities. The Fed has repeatedly said that it will slow its easing efforts based on inflation and unemployment rates. The trend in jobless claims has been trending lower and inflation has remained benign, leading to the Federal Reserve saying on Wednesday that the downside risk in the jobs market has diminished. To that end, the health of the economy will continue to be evaluated, but easing efforts could begin this year and come to an end in mid-2014.

Wall Street did not like hearing that the easing plan that has been largely responsible to rising equities could be ending, leading to broad selling yesterday afternoon. If it had not been for Bernanke’s comments yesterday, today’s report may have been received with welcome arms as jobless claims eking upward recently has been interpreted as meaning the Fed will continue its easing efforts.

In early trading on Thursday, the Dow Jones Industrial Average is down by 175 points, the S&P 500 is lower by 18 points and the Nasdaq is off by 35 points.