More people are applying for unemployment insurance, a first sign of weakness in a part of the labor market that has been running red-hot in recent months.
New applications for unemployment benefits rose to 293,000 in the second full week of 2016, the Department of Labor reported Thursday morning, continuing a recent upward trend. That was the highest number for jobless claims since July.
Economists had expected jobless claims to drop from an unrevised 284,000 to 275,000, and halt the recent upward movement, according to economists polled by Bloomberg.
Instead, they rose even higher, pushing the four-week moving average for claims up by 6,500 to 285,000. The average, which provides a more reliable indication of the medium-term trend for claims, was the highest since April.
Even despite the recent increase, the monthly average for claims is still lower than it was at anytime in the expansion of the mid-2000s. Nevertheless, the direction is wrong.
Economists view jobless claims as an indication of layoffs, with low numbers of claims generally indicative strong monthly net job growth.
Thursday’s numbers will lead economists in the government and on Wall Street to revise down their expectations for job growth in the months ahead, and add to concerns about the possibility of the economic recovery faltering.
The increase is “not a big move, but it is enough to be concerning,” wrote Jim O’Sullivan, chief U.S. economist for the forecasting firm High Frequency Economics. “The data are starting to suggest some slowing.”
Because the jobless claims are released on a weekly basis, they are viewed as a real-time time indicator to accompany the monthly jobs report.
Payroll job growth has been notably strong in recent months, averaging nearly 284,000 new jobs a month even thought economist expect growth to slow as unemployment returns to near normal.
Job growth, however, has been the main factor propping up hopes for continued growth in the U.S. economy. In contrast, output growth is thought to have slowed to near zero in the fourth quarter of 2015, while retail sales and industiral production have been contracting.
The Labor Department adjusts the initial jobless claims numbers to smooth out predictable seasonal fluctuations.
