Wednesday 17 January 2018

Jobless claims rise in US but analysts stay optimistic on progress

US President Barack Obama
US President Barack Obama

Shobhana Chandra

The number of Americans filing for unemployment benefits unexpectedly increased to a two-month high last week.

First-time claims rose by 16,000 to 360,000 in the week ended July 6 from a revised 344,000 according to official figures.

Claims are difficult to adjust in July for seasonal reasons such as vehicle plant shutdowns and the Independence Day holiday, a Labor Department spokesman said as the figures were released.

Swings in jobless applications occur as car manufacturers close for annual retooling, for example.

Job losses need to slow to lay the groundwork for a pickup in hiring once the effect of higher taxes and federal budget cutbacks fades in the second half of the year. Sustained job gains would help propel income growth and underpin household spending, the biggest part of the economy.

"July claims numbers get totally bounced around by the auto-plant shutdowns," said Brian Jones, senior US economist at Societe Generale in New York, who correctly forecast the level of claims.

"The labour market is showing steady progress. The pace of hiring is good," Mr Jones added.

Another report from the Labor Department showed import prices fell for a fourth straight month in June as costs declined for food, natural gas and motor vehicles.

The number of people continuing to receive jobless benefits rose by 24,000 to 2.98 million in the week ended June 29.

The continuing claims figure does not include the number of Americans receiving extended benefits under federal programmes. Those who have used up their traditional benefits and are now collecting emergency and extended payments decreased by about 22,700 to 1.65 million in the week ended June 22.

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 2.3pc in the week ended June 29, yesterday's report showed.

Volatility

"Claims could be in for a bumpy ride over the next couple weeks," said Tom Simons, an economist at Jefferies LLC in New York.

"Changes in production schedules in the auto sector could again cause some volatility in initial jobless claims, making the data difficult to interpret." (Bloomberg)

Irish Independent

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