The numbers: The number of people who applied for jobless benefits last week shot up to a nearly five-month high, but the surprising spike likely stemmed from season quirks just ahead of the holiday season instead of a pronounced increase in layoffs.
Initial jobless claims rose 14,000 to a seasonally adjusted 225,000 in the seven days ended Nov. 9, the government said Thursday. That’s the highest level since late June.
Economists polled by MarketWatch estimated new claims would total 215,000
The monthly average of new claims nationwide, meanwhile, rose a much smaller 1,750 to 217,000. The four-week average gives a more stable view of the labor market than the more volatile weekly number.
What happened: Actual or unadjusted jobless claims posted inordinately large increases in a handful of states, including California, New Jersey, New York, Minnesota and Texas. It’s possible the wildfires in California contributed to the increase in that state.
The level of unadjusted claims, however, was virtually unchanged compared to the same week in 2018 (236,724 vs. 235,981). That might be a sign the big increase in seasonally adjusted claims is an anomaly.
The government adjusts jobless claims to account for periodic swings in seasonal employment patterns. In most weeks the adjustments don’t matter, but they can result in gyrations that are most pronounced around big holidays such as Thanksgiving and Christmas.
Wall Street is sure to watch new jobless claims closely in the coming weeks to see if they continue to rise.
Meanwhile, the number of people already collecting unemployment benefits, known as continuing claims, fell by 10,000 to 1.68 million. These claims are near the lowest level since the early 1970s.
Big picture: Even though the economy has slowed, there’s little evidence it’s slowed enough to spur companies to lay off lots of workers or sharply scale back production.
Many firms worry that if they cut talented staffers they won’t be able to replace them if the economy picks up again. The labor market is extremely tight, with unemployment at a 50-year low. That’s helping to shield the U.S. from recession.
What they are saying? “Jobless claims rose more than anticipated, but that’s just seasonal noise (the trend remains low),” chief economist Scott Brown of Raymond James told clients in a note.
“It is important to keep in mind that November is a tricky month for seasonal adjustment,” said Thomas Simons, senior money market economist at Jefferies LLC.” There are two holidays during the month, and the floating nature of Thanksgiving makes it even more difficult to adjust for than a fixed-date holiday like Veteran’s Day. Claims may be volatile over the next several weeks, but we would not read too far into that.”
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