More Americans than forecast filed first-time claims for unemployment insurance payments last week, indicating it will take time for the labor market to mend.
Applications for jobless benefits increased by 51,000 to 454,000 in the week ended Jan. 22, Labor Department figures showed today. Economists forecast 405,000 claims, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls rose, while those collecting extended payments fell.
A Labor Department official said snow in four southern states in previous weeks created a backlog of claims that were processed last week. While the economy has improved, it hasn’t been enough to reduce an unemployment rate that Federal Reserve policy makers said yesterday is too high and requires pressing ahead with a $600 billion stimulus plan.
“If claims drift higher, we’re just going to have to wait and see, tread water,” Julia Coronado, chief economist for North America at BNP Paribas in New York, said. “We’re creating enough jobs to keep the unemployment rate roughly steady and at a pace to keep the economy on track, but it’s not necessarily a picture of rapid improvement.”
Estimates in the Bloomberg News survey of 52 economists ranged from 375,000 to 428,000, after the Labor Department initially reported claims fell to 404,000 the prior week.
Futures on the Standard & Poor’s 500 Index expiring in March fell 0.2 percent to 1,291.70 at 8:47 a.m. in New York. The yield on the 10-year Treasury note, which moves inversely to price, rose to 3.44 percent from 3.42 percent late yesterday.
The Labor Department official said winter weather in Alabama, Georgia, North Carolina and South Carolina in previous weeks kept people from filing claims. Those unemployed Americans ended up filing last week, boosting the claims number.
“In addition to seasonal volatility, we have this extra effect in the numbers,” the Labor Department official said as the figures were released.
The four-week moving average, a less-volatile measure, rose to 428,750 from 413,000.
The number of people continuing to collect jobless benefits increased by 94,000 in the week ended Jan. 15 to 3.99 million. Economists forecast the number would increase to 3.87 million.
The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 98,000 to 4.62 million in the week ended Jan. 8.
President Barack Obama in December signed into law an $858 billion bill extending for two years tax cuts for all income levels. The measure also continues expanded jobless insurance benefits to the long-term unemployed for 13 months and reduces payroll taxes for workers by two percentage points this year.
“These steps, taken by Democrats and Republicans, will grow the economy and add to the more than one million private-sector jobs created last year,” Obama said this week during the State of the Union address.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 3.2 percent in the week ended Jan. 15, today’s report showed. Fifty states and territories reported a decrease in claims, while three had an increase. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Economic expansion in the U.S. is “continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions,” the Federal Open Market Committee said yesterday in its statement after a two-day meeting in Washington.
Unemployment is too high to be consistent in the long run with policy makers’ congressional mandate of full employment, the Fed said, repeating that progress toward its objectives has been “disappointingly slow.”
The labor market gradually improved at the end of last year, with unemployment falling to 9.4 percent in December from 9.8 percent a month earlier, according to Labor Department figures released Jan. 7. The country added 103,000 jobs in December, fewer than economists forecast in a Bloomberg survey.
Some companies have been shifting the composition of their workforce to meet consumer demand, which probably grew 4 percent in the final three months of last year, according to the median estimate of economists surveyed by Bloomberg before the Commerce Department’s first estimate of fourth-quarter growth tomorrow.
Lowe’s Cos., the second-biggest U.S. home-improvement retailer, said this week it plans to eliminate 1,700 middle-management jobs in stores as profit growth trails that of larger Home Depot Inc. At the same time, Mooresville, North Carolina-based Lowe’s plans to add 8,000 to 10,000 weekend sales positions to improve staffing at the chain’s busiest time of the week.
General Motors Co., the largest U.S. automaker, will add a third shift and about 750 jobs to its assembly plant in Flint, Michigan, to meet rising demand for pickups, according to a Jan. 24 statement. The hiring will start in the second quarter, and the additional shift will begin in the third quarter, Detroit-based GM said.
“Adding a third shift is a response to customer demand for heavy-duty pickups, which most people use to tow, haul and plow,” Mark Reuss, president of GM North America, said in the statement. “Equally importantly, it brings jobs and a needed economic boost to the Flint area.”