June 23, 2011 / 12:38 PM / 6 years ago

Instant view: Jobless claims rise more than expected

5 Min Read

NEW YORK (Reuters) - New U.S. claims for unemployment benefits rose more than expected last week, a government report showed on Thursday, suggesting little improvement in the labor market this month after employment stumbled in May.



"There's reason to believe the auto industry may be beginning its seasonal retooling earlier than usual. The beige book for the Chicago district last week mentioned that some auto companies are planning to retool for the new model year, shift that retooling forward from July into June. We don't know whether that's a factor behind this increase or not.

"But last week one of the states mentioning an increase in the number of layoffs that was larger than a 1,000, Ohio, cited layoffs in the automobile and transportation industries. We don't know if that's related to seasonal retooling or just simply the ongoing affects of the parts shortage. It could be that's part of the explanation.

"So it seems like the softness has some breadth to it and in that regard this is not a particularly encouraging report.

"If that's the case (shift in seasonal retooling) to the extent to which that's the case, this week, next week and the following week we may see an upward bias to reported claims. And if that is the case, we'd be likely see a significant correction to that in early July."

Asha Bangalore, Economist, Northern Trust, Chicago

"Yesterday Fed Chairman Bernanke talked extensively about the labor market. These numbers remain troubling. My conclusion is that the problem in the labor force is very uneven.

"We have the Fed doing nothing (in terms of raising rates) through 2012. The criteria for another round of quantitative easing however will be different. We don't have a deflation threat anymore. The Fed is going to weigh the cost and benefit of another round of quantitative easing."


"The jobless numbers are disappointing, yet they corroborate a lot of other economic indicators showing that the U.S. recovery is stumbling and that companies are reluctant to add to their payrolls when it appears that the economy is loosing steam."

"Keep in mind that the U.S. already produces a record amount of goods and services. The national output is greater than ever before, and the economy is able to do this with many fewer workers, so there is less incentive to hire workers."

"It shows a very lackluster economy with lackluster job growth, but not the kind of emergency that would lead the Fed to another round of quantitative easing."

"I think that the stock market will probably loose a little following these numbers because there's probably going to be an increase in concern that with the economy slowing. We'll likely see movement out of stocks out of concern that the slowing economy would generate fewer earnings, and movement into fixed income, like bonds, or an increase in short-term funds."

Michael Feroli, Chief u.s. Economist, Jp Morgan, New York

"We have been disappointed already. If we are above 400 (thousand) by August... I think that raises some questions about the second half rebound story."

Sean Incremona, Economist, 4cast Ltd, New York

"Another disappointing number -- it is really showing a flat trend there, again no quick rebound in employment. We're still in the soft patch that we have had for a couple of months now. There were technical problems cited, but overall it seems the trend is going nowhere.

"Over the course of the next few weeks and few months we will definitely be able to pin this down, but our base case is that we will crawl out of this and chug along with a moderate recovery."


"Initial jobless claims for the week to June 18 increased by 9k to 429k, with the preceding week's number revised up to 420k from 414k. The market had expected this week's level to remain at 414k, so the data is a disappointment, and coming in the survey week for June's non-farm payroll hints at subdued growth there, if not necessarily quite as slow as in May. We suspected a fall in initial claims last week, originally reported as 16k, now seen at 10k, was assisted by more favorable seasonal adjustments. This week's seasonal adjustments were less helpful. Unadjusted claims fell by 6k but the adjusted number rose by 9k. The number may be more prone to revision than usual, as technical problems caused the totals for 6 states to be estimated. The 4 week average is unchanged at 426.25k. This is down from 440.25k in the May payroll survey week when one week was inflated by special factors, notably a spring break in New York. Excluding that week the picture looks similar to that in May and up from sub-400k 4 week averages in the March and April payroll survey weeks, suggesting that a slowing in the labor market recovery that the Fed noted yesterday persists."

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