As we briefly mentioned in our daily “Morning Market Roundup,” the number of Americans seeking unemployment benefits surged last week by 34,000 to a seasonally adjusted 386,000, according to the latest figures from the Labor Department.
So why the increase? Most economists agree: “seasonal factors.”
“More Americans than forecast filed first-time claims for unemployment insurance payments last week as the volatility induced by the annual auto-plant retooling period started to wear off,” Bloomberg reports.
“The number of U.S. workers filing applications for jobless benefits rose sharply last week, as seasonal factors play havoc with the data,” the Wall Street Journal reports.
Let’s turn to Zero Hedge to see what they make of the Labor Department’s data:
So much for last week's shocking beat in Initial Claims, which as a reminder printed at 350K on expectations of 372K, driven by the July 4 holiday and, what we described were "onetime factors such as fewer auto-sector layoffs than normal likely caused the sharp decline."
Okay, so last week’s depressed figures were somewhat of an anomaly. July is a volatile month. Nevertheless, while most everyone realized that those low(er) numbers would be short-lived, there were still a few people who trumpeted that report as great news.
This week’s gain in jobless claims, as the Hedge notes, follows a drop of 24,000 the previous week and was the biggest jump since April 2011.
"All of this is statistical noise," Joshua Shapiro, chief U.S. economist at MFR Inc., wrote in a note to clients. "What will be more important than these short-term gyrations is where claims settle down after the distortions end. We suspect that the data will point to a soggy labor market."
The less volatile four-week average fell by 1,500 to 375,500.
Nearly 5.8 million Americans were receiving some type of unemployment benefit the week that ended June 30, according to the most recent data available. That was down from 7.3 million a year earlier.
"Although the labor market is stronger than it was in 2011, it is not particularly robust," says Steven Wood, chief economist at Insight Economics.
Job growth slowed to 75,000 a month from April through June, down from healthy 226,000 pace the first three months of the year. Unemployment has been stuck at 8.2 percent for two straight months.
A survey from the Fed said hiring was "tepid" in most districts in June and early July, and manufacturing weakened in most regions.
The only piece of good news we've had recently are reports that the housing market is finally starting to look up. The government reported Wednesday that U.S. builders last month broke ground on the most homes in nearly four years. Single-family home building rose for a fourth straight month. And permits to build single-family homes hit the highest level since March 2010.
The Associated Press contributed to this report.