- Jump in applications may be due to typical holiday volatility
- Last time claims were this high was Indepence Day holiday
The number of Americans filing applications for unemployment benefits rose more than projected during the Christmas week, reaching the highest level in almost six months, perhaps reflecting typical swings during holidays.
Jobless claims jumped by 20,000 to 287,000 in the week ended Dec. 26, a report from the Labor Department showed on Thursday in Washington. The median forecast of 30 economists surveyed by Bloomberg called for 270,000. Applications haven’t been this high since the week ended July 4, the American Independence Day holiday.
While there was nothing unusual in the state-level data, the jump could have been caused by the volatility introduced when the numbers are adjusted for seasonal variations, a Labor Department spokesman said as the figures were released to the press. Limited firings, steady hiring and an unemployment rate at more than a seven-year low underscore job market improvement that allowed the Federal Reserve to lift interest rates this month for the first time since 2006.
“We do have to discount the heightened volatility we have around this time of the year,” said Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado, who correctly projected the jump. “When the dust settles, we’ll see claims drop back down. There will be continued slow improvement in the labor market.”
No states estimated data last week, according to the Labor Department. Before adjusting for seasonal variations, the increase in claims last week was about typical for this time of year, the agency spokesman said. The seasonal adjustment, however, wasn’t anticipating the increase, the spokesman added.
Economists’ estimates in the Bloomberg survey for weekly jobless claims ranged from 259,000 to 287,000. The previous week’s figure was unrevised at 267,000.
The four-week moving average, a less volatile measure than the weekly claims numbers, increased to 277,000 last week from 272,500.
The number of people continuing to receive jobless benefits rose by 3,000 to 2.2 million in the week ended Dec. 19. The unemployment rate among people eligible for benefits held at 1.6 percent. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings, and a sustained low level of applications has typically coincided with faster job gains. Many layoffs may also reflect company- or industry-specific causes, such as cost-cutting or business restructuring, rather than underlying labor market trends.
Since early March, claims have been below the 300,000 level that economists say is typically consistent with an improving job market.
Data released earlier this month showed the economy added 211,000 workers in November, and the unemployment rate held at 5 percent, more than a seven year low.
Citing improvement in the economy and the labor market, Fed policy makers on Dec. 16 set the new target range for the federal funds rate at 0.25 percent to 0.5 percent, up from zero to 0.25 percent.
(Updates with economist comment in fourth paragraph.)