The number of applications for unemployment benefits unexpectedly increased last week to a six-month high, indicating tempered progress in the labor market.
Initial jobless claims climbed by 10,000 to 293,000 in the week ended Jan. 16, a report from the Labor Department showed on Thursday. Last week coincided with the period that the government surveys businesses and households to calculate payrolls and the jobless rate for January.
Plunging oil prices may encourage further cuts in the energy sector at the same time manufacturers reconsider headcounts as the global economy slows. Even so, a sustained rise in jobless claims would be needed to confirm that layoffs are on the rise and suggest a general weakening in the labor market.
“Overall, I wouldn’t be too concerned,” said Gregory Daco, head of U.S. macroeconomics at Oxford Economics USA in New York. “As long as the trend continues to be gradual, it’s not excessively worrying. We are going to see more moderate job growth as the labor market continues to tighten.”
The number of applications last week was the most since the period ended July 4. The median forecast in a Bloomberg survey of economists called for claims of 278,000.
The four-week moving average, a less volatile measure than the weekly figures, increased to 285,000, the highest since mid-April, from 278,500. That compares with an average of 270,750 during the comparable employment survey period for December. The economy added 292,000 workers last month, more than projected, and the unemployment rate held at 5 percent.
Economists’ estimates in the Bloomberg survey for weekly jobless claims ranged from 267,000 to 320,000. The previous week’s figure was revised to 283,000 from an initially reported 284,000.
Even with the unexpected increase, claims have held below 300,000 since early March. That’s a level that economists say is typically consistent with an improving job market.
While claims for Wyoming and Puerto Rico were estimated last week, there was nothing unusual in the data, according to the Labor Department.
The number of people continuing to receive jobless benefits fell by 56,000 in the week ended Jan. 9, the most since early July, to 2.21 million. The unemployment rate among people eligible for benefits dropped to 1.6 percent from 1.7 percent. These data are reported with a one-week lag.
While the labor market has shown few signs of weakening, progress could slow as the U.S. economy feels the strain of weaker global growth. Financial-market volatility could also prompt some employers to exercise more caution with their headcounts.
“The low point in jobless claims in now behind us,” said Thomas Costerg, a senior U.S. economist at Standard Chartered Bank in New York. “Momentum in the labor market seems to be fading gradually.”
Initial jobless claims reflect weekly firings, and a sustained low level of applications has typically coincided with faster job gains. Layoffs can also reflect company- or industry- specific causes, such as cost-cutting or business restructuring.
© Copyright 2022 Bloomberg News. All rights reserved.