Jobless Claims Jump to Highest Level Since February
The amount of people seeking unemployment benefits rose a week ago towards the highest level since late February, however the increase was probably more a result of temporary auto plant shutdowns than any underlying labor market weakness.
The amount of people filing applications for unemployment benefits rose by 15,000 to 297,000, the Labor Department reported Thursday. This is the highest weekly total since 327,000 applications were filed inside week of Feb. 28.
Despite having the recent increases, benefit applications, which can be a proxy for layoffs, stay at levels that reflect a labor market that's been posting solid employment gains. The four-week average for claims, which smooths out a number of the volatility, rose to 279,500, up slightly from 275,000 the previous week. It turned out the greatest level for that four-week average since early May.
One of several states posting a sizable jump was Michigan, where you can many U.S. auto plants, which typically shutdown in the summer to retool to get a new model year.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, stated that the jobless claims data will be distorted for a couple weeks.
“We now have no reason in any respect to believe that this underlying trend in claims has changed as soon as the shutdowns have ended we’d expect claims to revert to 280K or so,” he said inside a research note. “At the same time, anything can happen in the next couple of weeks.”
The number of people receiving benefits stood at 2.33 million for your week ending June 27, up on the previous week but 9.9 percent under a year ago.
Other labor market indicators have never performed at the same time — a fact the chairwoman on the Federal Reserve, Janet L. Yellen, often cites in explaining why the central bank hasn't yet begun raising interest levels.
In June, wage growth stalled, with hourly wages up just 2 percent during the last twelve months. As well as the unemployment rate fell for the wrong reason: Some people underemployed apparently got discouraged and lost the fight searching for a job.