The number of Americans who applied for unemployment benefits in early December soared to highest level in more than two years, but the spike was likely tied to a later than usual Thanksgiving holiday instead of rising layoffs. Initial jobless claims jumped 49,000 to a seasonally adjusted 252,000 in the first week of December., the government said Thursday. That’s the highest level since September 2017. Economists polled by MarketWatch estimated new claims would total 220,000 in the seven days ended Dec. 7.
Raw or unadjusted jobless claims show unusually large increases in a number of states, including California, New York, Texas, Pennsylvania, Georgia and Minnesota. Jobless claims often gyrate during the long holiday season that starts after Thanksgiving. Laid-off workers wait longer to file claims, unemployment offices are closed more often and companies add and drop temporary workers. Poor weather can also skew the numbers. The Thanksgiving holiday, which falls in different weeks each year, appears to have thrown off the government’s process of adjusting jobless claims for seasonal swings in employment. The holiday took place on Nov. 22 in 2018 and on Nov. 28 in 2019. The more stable monthly average of new claims, by contrast, rose a much smaller 6,250 to 224,000. That more likely reflects the underlying level of jobless claims.
Meanwhile, the number of people already collecting unemployment benefits, known as continuing claims, fell by 31,000 to 1.67 million. What they are saying? “Jobless claims surprised to the upside, but that’s just noise reflecting difficulties in adjusting for the late Thanksgiving,” said chief economist Scott Brown of Raymond James. “The underlying trend remains low.”
“The bottom line is that there is nothing to see here. We should not read too far into this jump in claims, nor should we read too far into the dip to a seven-month low last week,” said senior money market economist Thomas Simons of Jefferies LLC. “ Seasonal adjustment is difficult this time of year, and the center of gravity remains right around 215,000.” Economists predicted claims would shoot higher after a surprisingly low 203,000 reading in the last week of November. In all likelihood jobless claims will subside in the next few weeks as the effects of the Thanksgiving holiday fade. Wall Street will be watching closely to see that it does.
Other labor-market indicators show no sign of widespread layoffs. Last week the government said a whopping 266,000 new jobs were created in November, pushing the unemployment rate back down to a 50-year low of 3.5%. And the companies that are still hiring say their biggest problem is finding skilled workers. The Dow Jones Industrial Average fell slightly and the S&P 500 surged in Thursday trades after President Trump tweeted that the US and China are very close to completing the first phase of a trade agreement.
Source: MarketWatch
