Weekly Jobless Claims Bring Back Scares to the Great Employment Economy

Weekly jobless claims posted a serious jump in the week ending May 7. The U.S. Department of Labor announced that seasonally adjusted claims rose a sharp 20,000 to 294,000. This gets the figure closer to that old 300,000 weekly norm.

Thursday’s report of 294,000 in weekly jobless claims was handily above expectations. Bloomberg had the estimate at 267,000 and Dow Jones had an estimate of 265,000.

As usual, the Labor Department said that no special factors had an impact on this week’s initial claims. This marked the highest level of claims going back to February 2015. And this report marked the 62nd consecutive week of initial claims below 300,000, the longest streak since 1973.

The four-week moving average was 268,250, an increase of 10,250 from the previous week’s unrevised average of 258,000.
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Additional data also showed weakness, and this could be setting the stage for the weak payrolls gains in April to continue in May. The continuing claims (with a one-week lag) rose by 37,000 to a level of 2,161,000. This was the highest level for insured unemployment in the four prior weeks.

The advance seasonally adjusted insured unemployment rate was 1.6% for the week ending April 30, unchanged from the previous week’s revised rate. The previous week’s rate was revised up by 0.1 from 1.5% to 1.6%.

U.S. financial markets were sharply higher early on Thursday. The weak data and other concerns seem to have weighed on the euphoria.

Maybe the good news about this weak report is that it may temper some Federal Reserve presidents’ ambitions to talk up the importance of raising interest rates so fast. Only one voting member of the Federal Open Market Committee voted to raise rates at the last meeting, and the odds for a June hike remain uncertain.