Washington: Filings for U.S. unemployment benefits unexpectedly held at a two-month high last week, possibly reflecting the late timing of this year’s Easter holiday and spring vacations.
Jobless claims were unchanged at 230,000 in the week ended April 27, according to Labor Department figures released Thursday, compared with economist estimates for a decline to 215,000. The four-week average, a less-volatile measure, increased to 212,500, the highest since late March.
While claims data often show volatility around holiday periods, the figures, if sustained at this level or higher, might signal some softening in an otherwise strong labor market.
The data follow the biggest increase in jobless claims since late 2017 in the prior week. Some economists had attributed the jump in part to the Easter holiday — which fell this year on April 21 — and a supermarket chain strike in New England.
Thursday’s report appeared to back up at least some of that theory. The Labor Department cited layoffs in the “educational service” industry in Massachusetts, Rhode Island and New Jersey, as well as in retail in Massachusetts, in the week ended April 20. New York and New Jersey had the biggest increases in unadjusted claims for the week ended April 27.
A gauge of factories released Wednesday fell to the lowest since 2016 as a measure of manufacturing employment declined.
Payrolls data Friday are forecast to show April jobs growth just above the 180,000 average over the past three months, after a separate measure of private employment topped expectations on Wednesday.
Continuing claims, which are reported with a one-week lag, increased by 17,000 to 1.671 million in the week ended April 20.
The unemployment rate among people eligible for benefits held at 1.2 percent.
A separate Labor Department report Thursday showed Americans’ productivity rose at a 3.6 percent annualized pace in the first quarter, the fastest gain since 2014.
Why Markets Care About Unemployment Insurance Weekly Claims
Unemployment Insurance Weekly Claims – also called Jobless Claims or Initial Claims – measures the number of individuals who filed for unemployment insurance for the first time during the past week.
Unemployment Insurance Weekly Claims is the nation’s earliest economic data. The market impact fluctuates from week to week – there tends to be more focus on the release when traders need to diagnose recent developments, or when the reading is at extremes.
The usual effect is that if ‘Actual’ is less than ‘Forecast’, it is good for the dollar and vice versa.
Markets care because although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health since consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country’s monetary policy.
An initial claim is a claim filed by an unemployed individual after a separation from an employer. The claimant requests a determination of basic eligibility for the UI program. When an initial claim is filed with a state, certain programmatic activities take place and these result in activity counts including the count of initial claims. The count of U.S. initial claims for unemployment insurance is a leading economic indicator because it is an indication of emerging labor market conditions in the country. However, these are weekly administrative data which are difficult to seasonally adjust, making the series subject to some volatility.
Continued Weeks Claimed
A person who has already filed an initial claim and who has experienced a week of unemployment then files a continued claim to claim benefits for that week of unemployment. Continued claims are also referred to as insured unemployment. The count of U.S. continued weeks claimed is also a good indicator of labor market conditions.
Continued claims reflect the current number of insured unemployed workers filing for UI benefits in the nation. While continued claims are not a leading indicator (they roughly coincide with economic cycles at their peaks and lag at cycle troughs), they provide confirming evidence of the direction of the U.S. economy
Seasonal Adjustments and Annual Revisions
Over the course of a year, the weekly changes in the levels of initial claims and continued claims undergo regularly occurring fluctuations. These fluctuations may result from seasonal changes in weather, major holidays, the opening and closing of schools, or other similar events. Because these seasonal events follow a more or less regular pattern each year, their influence on the level of a series can be tempered by adjusting for regular seasonal variation. These adjustments make trend and cycle developments easier to spot. At the beginning of each calendar year, the Bureau of Labor Statistics provides the Employment and Training Administration (ETA) with a set of seasonal factors to apply to the unadjusted data during that year. Concurrent with the implementation and release of the new seasonal factors, ETA incorporates revisions to the UI claims historical series caused by updates to the unadjusted data.