WASHINGTON (12/13/13)--First-time unemployment claims rose dramatically during the week after the Thanksgiving holiday, according to the Labor Department.
Initial applications for jobless benefits increased by 68,000 to a seasonally adjusted 368,000 for the week ending Dec. 7--the highest one-week increase since Nov. 10, 2012, and the highest absolute level in two months (MarketWatch Dec. 12)
The Dec. 7 data on initial claims was higher than expected. Economists surveyed by Bloomberg collectively predicted 320,000 claims, with estimates ranging from 300,000 to 351,000 (Bloomberg.com Dec. 12). A Dow Jones poll of economists predicted 328,000 claims (The Wall Street Journal Dec. 12).
The spike in claims could be revised down due to erratic seasonal adjustments that typically occur around holidays. First-time benefit filings have fallen seven out of the past nine weeks, and the jobless rate fell to a post-recession low of 7% in November, reflecting employment gains in a range of industries. Moody's analysts predict that claims will fall to around 300,000 in the coming weeks--about what they were before the start of the Great Recession (Economy.com Dec. 12).
Continuing claims rose 40,000 to 2.79 million for the week that ended Nov. 30, according to the data released Thursday by the Labor Department.
The four-week moving average of initial claims--a more stable measure of weekly data--rose to 328,750. Meanwhile, the four-week average of continuing claims fell 4,750 to 2.79 million, the lowest level since January 2008.
Pierpoint Securities economist Stephen Stanley told MarketWatch, however, that hiring isn't robust, even if the Thanksgiving week claims are revised down.
Moody's analysts also warned that claims could rise with a drop in demand caused by the sudden loss of emergency unemployment insurance. Roughly 1.2 million people receiving jobless aid will lose benefits on Jan. 1, if the preliminary budget agreement reached this week in Congress passes. About a half million people on state benefits are also expected to be cut off in the first quarter of 2014, depriving about 1.7 million people of an average weekly benefit of $300.
The analysts pointed out, however, that they expect the withdrawal to be offset by a delay to sequestration cuts that is part of the deal.