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Weekly Jobless Claims Show Unexpected Increase

(RTTNews) – In a report that is likely to lead to renewed concerns about the job market, the Labor Department said Thursday that first-time claims for unemployment benefits unexpectedly showed a moderate increase in the week ended July 31st.

The report showed that initial jobless claims rose to 479,000 from the previous week’s revised figured of 460,000. The increase came as a surprise to economists, who had expected jobless claims to edge down to 455,000 from the 457,000 originally reported for the previous week.

With the unexpected increase, weekly jobless claims rose to their highest level since coming in at 480,000 in the week ended April 10th.

The Labor Department also said that the less volatile four-week moving average rose to 458,500 from the previous week’s revised average of 453,250.

On the other hand, continuing claims, a reading on the number of people receiving ongoing unemployment help, fell to 4.537 million in the week ended July 24th from the preceding week’s revised level of 4.571 million.

Reflecting the extension of unemployment benefits by Congress, the report also showed that extended benefits increased by a net 258 thousand in the week ended July 17th after showing notable decreases in previous weeks.

While weekly jobless claims rose to their highest level in over three months, Peter Boockvar, equity strategist at Miller Tabak, noted that jobless claims in July have been impacted by auto plant shutdowns or the lack thereof with respect to GM.

“Notwithstanding the seasonal noise in July, the level of claims remains stubbornly high and still point to a sluggish labor market,” Boockvar said.

He added, “While tomorrow we will hopefully see an expected 90,000 added to the private sector roles, the pace remains below what is needed to absorb the monthly additions to the labor force.”

Friday morning, the Labor Department is due to release its closely watched report on the employment situation in the month of July.

Economists expect the report to show that employment fell by 87,000 jobs in July following the loss of 125,000 jobs in June. The unemployment rate is expected to edge up to 9.6 percent from 9.5 percent in the previous month.

While payroll processor Automatic Data Processing, Inc. (ADP) released a report on Wednesday showing that private sector employment increased by a bigger than expected 42,000 jobs in July, any job growth in the private sector is likely to be offset by the elimination of temporary census jobs.

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