Economists Say Initial Job Claims Remain Elevated but True Level a 'Mystery'
The weekly U.S jobless claims survey reported that initial claims came in higher than anticipated by markets, though there was an encouraging 55k drop in the level of continuing claims. Economists say the trend in the report is clear, but that the report remains difficult to interpret because of multiple distortions.
Initial claims for unemployment benefits in the United States rose to 455k in the week ending Sept. 13, while the previous week's figure was unrevised at 445k, the Department of Labor reported on Thursday. The weekly level is just 2k below the cyclical high seen in the first week of August.
A Labor Department official told Bloomberg News claims were pushed up by the impact of Hurricane Gustav. No specific number was cited but the official said claims would have fallen from the previous week without the distortion.
"Together with the distortions caused by the extension of benefits, the true trend in claims is now something of a mystery," said Ian Shepherdson, chief U.S. economist at HFE. He said the distortion will only get worse as Hurricane Ike takes effect on the figures in next week's report.
"We are sure the labor market is in a bad way, but quite how bad is impossible to tell from these Numbers," he added.
Ian Pollick, economics strategist at TD Securities, said, "Surprisingly, the continuing claims were much lower than the market was expecting," adding that the decline "suggests that there could potentially be a decrease in the amount of time it is taking job seekers to find employment."
Continuing claims fell 55k to 3.478 million for the week ending Sept. 6, down from the previous week's cyclical high of 3.533 million.
This is the 19th consecutive week that continuing claims have been above the 3 million mark. The four-week moving average is now 3.461 million, up from the moving average of 3.431 million in the previous week.
Amine Tazi, U.S. economist at Natixis, expects the labour market to continue deteriorating for the rest of the month.
Claims have recently been higher than normal following new rules introduced by the Department of Labor that made filing for unemployment benefits easier.
By Patrick McGee and edited by Stephen Huebl
©CEP News Ltd. 2008