The labor market saw another apparent setback last week as initial jobless claims unexpectedly surged by 19,000 to 479,000, a three-month high, the Labor Department announced Thursday. However, in reporting the numbers, the department cautioned that the initial jobless claims statistic can be especially volatile during July and August, due to the normal, seasonal auto company and industrial shutdowns that take place over the summer.
According to a Bloomberg survey, economists had expected initial jobless claims to total 455,000.
Economists prefer to focus on the more telling four-week moving average, which also jumped by 5,250 to 458,500, as it smooths out anomalies in the data caused by holidays, strikes, and weather-related layoffs. Meanwhile, continuing claims fell by 34,000 to 4.54 million.
Monster Job Index Also Dips
Separately, the Monster (MWW) Employment Index also fell 3 points to 138 in July -- its first month-to-month decline in more than a year, Monster.com announced Thursday. However, Monster was careful to note that the index, a measure of employers' intentions to hire, has declined from June to July during every year since 2003, due to a routine summer hiring dip. What's more, the index is still up 21% -- or 24 points -- compared to July 2009. Also, Monster said all 28 metro areas it tracks showed increases in jobs posted online, on a year-over-year basis.
Returning to the jobless claims report, a year ago, initial jobless claims totaled 559,000, the four-week moving average stood at 559,750, and continuing claims totaled 6.19 million.
Initial jobless claims will need to drop below 400,000 before economists and most investors will have confidence that commercial activity is increasing at a pace that will prompt most companies to curtail layoffs and resume hiring.
States also reported 3.31 million persons claiming Emergency Unemployment Compensation benefits for the week ending July 17, the latest period for which data is available, an increase of 60,993 from the prior week.
The highest insured unemployment rates for the week ending July 17, the latest for which data is available, were in Puerto Rico, 7.2%; Pennsylvania, 5.3%; Oregon, 4.8%; Massachusetts, 4.7%: New Jersey, 4.7%, and California, 4.6%.
This week's initial jobless claims total was unusually high, but again, investors should keep in mind the volatility associated with the usual summer industrial shutdowns: That factor likely skewed the stat higher. Should initial claims remain at current levels into September, that would be a clear sign of weakening labor market conditions.
Investors also should not assume that this week's jobless claims report presages that the July nonfarm payroll report, scheduled to be released at 8:30 a.m. Friday, will also be be poor. The two reports are not strongly correlated. That payroll report is expected to show a gain of 100,000 private sector jobs, after excluding the loss of about 170,000 temporary U.S. Census jobs.
Initial Jobless Claims Jump 19,000 to 479,000