Do These Jobless Numbers Indicate an Improving Market?
The number of Americans filing new claims for unemployment benefits increased for the first time in three weeks. However, despite this greater-than-anticipated jump, unemployment stayed at a level consistent with an improving labor market.
Initial jobless claims increased by 20,000 to 362,000 for the week ended February 16, reported the Labor Department on Thursday. Economists polled by Bloomberg had expected claims to go up, but they had only predicted an increase to 355,000.
At the state level, ten states reported a decrease in claims of 1,000 or higher and one state, Kansas, reported an increase of more than 1,000.
Continuing uncertainty, stemming from ongoing debates in Congress over the federal government’s fiscal policy, has left employers in a precarious position. Given last week’s unemployment figures, it does appear that companies are keeping their staffing levels constant even though rising gasoline prices and the January hike in the payroll tax is expected to hurt consumer spending. But companies could limit hiring in the coming months if Congress is unable to come to an agreement to avoid the looming automated government spending cuts scheduled for March 1…
“Businesses just seem to be sitting tight with regard to layoffs, which is reason for optimism,” Moody’s senior economist Ryan Sweet told Bloomberg before the report. “If we get through these hurdles over the next couple months the job market should begin to improve more noticeably,” he added.
The four-week moving average — a less volatile measure of unemployment — also rose last week, increasing from 352,750 to 360,750. In addition, the number of people continuing to receive unemployment increased by 11,000 to 3.15 million in the week ended February 9.
Initial jobless claims are an indication of weekly firings and usually drop as job growth, measured by the monthly non-farm payroll report, increases. Last month, employers added 157,000 jobs to their payrolls, and that number is expected to remain constant in February. But job gains still remain far below the 250,000 per month level that economist say is the minimum needed to significantly reduce the unemployment rate, which ticked up 0.1 percentage point to 7.9 percent in January.
This persistently high level of unemployment prompted the Federal Reserve to launch an open-ended bond buyback program last year that it said it will keep in place until the labor market improves substantially. However, the minutes from the central bank’s meeting on January 29 and 30 indicated that it may have have to slow or stop the program because of prohibitive costs.
Here’s how the 3 major stock indices finished Thursday: