The number of Americans filing new claims for first-time unemployment benefits in the seven days ended Jan. 10 rose to the highest level in four months, a small setback for a labor market that had just recorded its best year since 1999.
The first full week of the year shows sudden swings after the holiday season, making it difficult to find if the increase points to any deterioration in what’s been a rapidly improving U.S. labor market.
“It happens at the beginning of every calendar quarter and the beginning of every year, so it’s difficult to seasonally adjust at this time,” said Brian Jones, a senior U.S. economist at Societe Generale in New York, who projected claims would jump to 325,000. “People are finding work. The labor market is fine.”
Initial jobless claims rose 19,000 to a seasonally adjusted 316,000 last week, the Labor Department said Thursday. In the same week last year, claims were at 329,000.
The rapid rise in claims scored their top level not seen since early September. It’s the first time claims have increased above the 300,000 mark since Thanksgiving. Economists were expecting claims to total a seasonally adjusted 295,000.
The unexpected climbs in US unemployment insurance benefits, coming one day after a weak retail-sales report for December, brings more anxiety among U.S. investors.
Economists, however, warned that it is not good to read too much into the report. It should be noted that initial claims from Thanksgiving until the end of January are often volatile due to the holiday season and poor weather. In addition, companies in sectors such as retail also hired temporary staff earlier in 2014 than usual, so they might be laying off temporary or seasonal employees earlier as well.
The process is expected to take several weeks or longer to decide if a new trend is developing and they generally discount gyrations in unemployment benefits at the start of each year.
The claims report disclosed total U.S. citizens still receiving benefits after an initial week of aid saw a decrease of 51,000 to 2.42 million in the week ended Jan 3. US 4-week moving average of initial claims for unemployment insurance grew by 6,750 to 298,000.
US Producer Prices
Another report Thursday showed price pressures remained muted in December. The wholesale price index fell 0.3 percent last, the larges fall in more than three years, after dropping 0.2 percent in November, according to Labor Department data. The consensus forecast was for a 0.4 percent decline. In the 12 months through December, U.S. producer prices rose 1.1 percent.
“That makes the Fed’s job more difficult,” said Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh. “We expect inflation to slow … the Fed needs to be more cautious about raising interest rates.”
NY Fed Empire State Manufacturing Index
Also yesterday, The New York Federal Reserve’s index of manufacturing conditions expanded more than projected in January. The New York Fed said its general business conditions index climbed to 10 in January from a revised minus 1.2 in December. Economists projected the index to increase to a positive 5.0. Readings above zero signal growth.