The rising number of Americans filing for unemployment benefits is starting to worry some economists, though the latest increases came during holiday periods typically associated with data volatility.
Initial jobless claims rose 10,000 last week to 234,000, the third straight gain and the highest level since May, a Labor Department report showed Thursday. The median estimate in a Bloomberg survey was for a decrease to 220,000. The last two weeks included the Thanksgiving holiday and observance of Veterans Day, and filings tend to show wider swings around such events.
“The weekly series tends to be noisy and the numbers can be especially choppy … towards the end of the year, but the trend in the data clearly has deteriorated over the past couple of months,” economist Daniel Silver of JPMorgan Chase wrote in a note Thursday.
While the recent rise may be consistent with forecasts for some moderation in economic and job growth over time, “Jobless claims are also an important input into our recession risk monitors, and continued weakening in the data could become a more worrisome signal for the economy,” Silver said.
Jim O’Sullivan, chief U.S. economist at High Frequency Economics, wrote in a note that “some of the rise could reflect seasonal adjustment challenges,” yet there may also be a “significant weakening in demand for workers.”
“For now at least, the data add to the case” for Federal Reserve officials “to be cautious about further tightening,” he said.
Meanwhile, Michael Gapen of Barclays said in a note that the rise in claims is “consistent with the recent increase in financial market stress and the ebbing in fiscal stimulus.” He said it may also be linked to stresses in areas such as California, New York and the industrial Midwest — places with strong trade ties to China — that are feeling the “effect of protectionism, actual or expected.”
Among those who are less worried is Societe Generale economist Omair Sharif, who wrote the increase should be taken “with a large grain of salt” and that holidays from November to February “make seasonal adjustment a nightmare.”