Initial jobless claims again unexpectedly rise
Economists surveyed by Bloomberg News had expected jobless claims to fall to 550,000. On the other hand, economists view the 4-week average as a better indicator of unemployment conditions, as it smooths-out anomalies for strikes, holidays, or other idiosyncratic events; by this measure, the average for initial jobless claims increased by 4,250 to a total of 565,750.
Economists also monitor the continuing claims stat because it provides a snapshot of how long it's going to take the typical person to find comparable employment once he/she has sustained a job loss. In general, continuing claims above 3 million reflect a slack labor market, indicating extended 6-9 month (or longer) job searches.
Some economists will likely cast aside the second consecutive weekly rise in initial claims as an anomaly, and focus on the downtrend in the more-telling 4-week moving average. However, many market participants may begin to express some concern. If the rise in initial jobless claims persists, it could begin to raise concerns about a retrenchment in the labor market - something that would be bad news for U.S. stock markets and investors.
Economic Analysis: Again, given that the second consecutive weekly rise occurred in a summer month (August), historically a volatile period for jobless claims, we'll ignore the data point. The rise suggests that companies are still attempting to cut costs even as the economy stabilizes; one way to do so is a job pare-back.
On the other hand, if the increase continues past Labor Day, that would be cause for concern. That's because the nation has an enormous employment task ahead of it: more than 6.7 million jobs have been eliminated since the recession's start in December 2007 and there are now 14.7 million unemployed adults. Hence, there's little room for a retrenchment in the job lay-off category. Any reversal of the downtrend would throw a host of social spending and related state/federal costs in the wrong direction. This is why the U.S. economy must continue to exhibit progress, long-term, from a workforce standpoint.