Seasonal shutdowns caused a spike in the number of people who applied for unemployment benefits during the week ended 4 July, to the highest level since February 2015.
The U.S Department of Labor said on Thursday that the number of new claims for state unemployment benefits rose by 15,000 to a figure of 297,000 after seasonal adjustments. A Reuters report revealed that a poll conducted amongst economists showed an expectation of 275,000 new claims applications.
The Labor Department also reported that the number of people continuing to claim benefits after an initial week of assistance rose by 69,000 to 2.334 million during the week ending 27 June.
The four week moving average which provides a more balanced figure by smoothing out weekly fluctuations, such as the current spike, rose by 4,500 to 279,500 with the latest report factored in.
Economists pointed out that the latest claims report is the 18th consecutive weekly report to indicate a new claims figure below 300,000. The view is that as long as the figure remains below 300,000, the labor market is in fact improving
Meanwhile, Reuters reported that a Labor Department analyst had said that there was nothing unusual in the state level data last week. He noted that claims data tends to be volatile in July because of retooling by auto plants during that period. Reuters also commented that the report covered the period which included the Independence Day holiday. Seasonal changes also occur in education-related employment during the summer school holiday period.
Agreeing with the Labor Department analyst, Jesse Hurwitz, an economist at Barclays Capital said that because of the holidays and auto plant shutdowns, he was inclined to overlook the volatility in the report.
Hurwitz said, “Trend readings of both initial and continuing claims remain low from a historical perspective, which we expect to continue.”
The higher claims numbers might however affect the Federal Reserve timing for an interest rate hike. Several Federal Open Market Committee members including Fed Chair Janet Yellen will be speaking at various venues on Thursday and Friday. Their attitude with regard to the timing of a rate hike could well become apparent during the various speeches.
For the present, the unemployment number at 5.3%, the number of new jobs created in June of 223,000 and new jobless claims remaining below 300,000 shows that there are still a number of positive indicators for a continued upswing in the U.S economy.