Job Claims Jump in the US
US jobless claims filed for the previous week rose unexpectedly. New applications for unemployment compensation climbed 15,000 to an adjusted 381,000 in the week ended Dec. 24, the Labor Department said. Claims from two weeks ago were revised up to 366,000 from 364,000. The market was forecasting claims for the latest week would rise to 374,000. The unexpected claims increase cannot be accounted for and at this time of the year, increases are not usually expected regardless of the economic situation.
This number will also most likely be revised upwards in the next week or two. Retailers have been reporting excellent sales during the Christmas season with surges in the last days before Christmas.
Estimates were used for seven states that didn’t complete their calculations in time because of a federal holiday on Monday, which a Labor official said was not usual. Those states included California, Virginia, Arizona and Colorado. These states are likely to add to the increased filings
Jobless claims have gradually fallen from the 2011 peak of 478,000 set in late April, with much of the decline coming in the past few months. Claims are now well below 400,000, a level historically associated with more hiring and fewer layoffs.
Yet claims reflects only the number of people who lose jobs, not those who find them, so it’s not a precise gauge of hiring trends. Economists also caution that the end-of-year holiday period tends to skew claims because of seasonal factors that are difficult to account for.
It was the fourth-straight week that claims were below the 400,000 mark, a positive sign as economists generally believe claims must remain consistently below that level to signal a real turnaround.
Even with the recent downward trend in new jobless claims, unemployment remains a significant problem. Earlier this month, the government reported that the unemployment rate for November fell to 8.6%, the lowest level since March 2009 but still well above historic norms.
The Federal Reserve predicts an unemployment rate in a range of 8.5% to 8.7% in 2012 as Americans head to the polls for the presidential election. The central bank has said it would consider additional efforts to prop up the economy to meet its mandate to keep unemployment in check.
The report doesn’t answer the question of when the pace of hiring’s will pick up to a higher and more sustainable level from where we’ve been. Reduced unemployment claims simply means that employers are keeping most of the staff, but does not signal additional hiring’s.
The markets took the news as positive at the jobless claims remained under the 400,000 level.
The Dow Jones Industrial Average increased 27 points to 12,108. The S&P 500 Index moved up 3.7 points at 1,248.2, while the Nasdaq added 7 points to 2,266.5.in early morning trading.