NEW YORK (Reuters) - New claims for unemployment benefits fell by 1,000 to a seasonally adjusted 428,000, the Labor Department said Thursday
The prior week’s figure was unrevised at 429,000.
It was the 12th straight week that claims have been above 400,000, a level that is usually associated with a stable labor market.
The number of people still receiving benefits under regular state programs after an initial week of aid fell 12,000 to 3.70 million in the week ended June 18. So-called continuing claims covered the survey week for the employment report’s household survey, from which the unemployment rate is derived.
Employment stumbled badly in May, with employers adding just 54,000 jobs — the fewest in eight months. Nonfarm payrolls are expected to have increased 90,000 this month, according to a Reuters survey, with the unemployment rate edging down to 9.0 percent. The employment report for June will be released on July 8.
TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKET, NEW YORK:
“Claims remain stubbornly high. The important thing for us in a bigger picture perspective, even with claims around this level it is still consistent with payrolls running around 150,000, and that is a pace we think we will get back to in the second half of the year. There is no impact from this number on our forecast for payrolls for next week — there we are looking for a very modest 110,000 in private and 85,000 on the headline. We think that this will probably be another month of just utterly modest payrolls growth, but that is consistent with the soft patch that we are going through.”
DAVID RESLER, CHIEF ECONOMIST, NOMURA SECURITIES, NEW YORK:
“We suspect that the last two weeks may be reflecting early seasonal shutdowns in the auto industry. We don’t know that for sure, but we do know some companies were planning to shut down for retooling in June rather than typically they do it in early July.
“There may be some of that behind the relatively higher readings the last two weeks than the previous weeks. It’s a possibility, we don’t know for sure how much of that’s in the data.
“We’re in a bit of soft patch in the economy, so I wouldn’t expect it to fall significantly, let’s say fall below 400,000 on a sustained basis until the economy is on a decidedly stronger footing.”
JOHN CANALLY, INVESTMENT STRATEGIST AND ECONOMIST, LPL FINANCIAL, BOSTON:
“People are kind of still underestimating the impact of the first school layoffs. School ended at end of May, and most can cancel out claims in September, but many don’t have jobs until September.”
“Also, usually auto plants shut down for retooling maybe the last week of June, first week of July. But because of the autopart shortages with the tsunami, many decided to move up the plant shut down to the middle of June. So the layoffs are hitting the data now. So we’ll have elevated readings now this week, but by the second week of July we’ll see them come down a bit.”
“The markets have had low expectations for data over the past week. But we’ve beaten lower expectations. So the bad news is priced in already.”
“The claims number, net-net, should have been a little bit positive for the bonds, but instead you’re seeing the shorts pressing.
“Claims seem to consistently be above expectations. Claims data is not telling a very good story because the labor market improvement we’ve seen in the past year and a half has been because of fewer layoffs and not more hiring. The number of people that are getting jobs each month is no better than it was at the worst levels of the labor market back in 2009. The improvement has been from less firing. So the increase in claims, from that regard, doesn’t tell a very good story.”
“We think in July definitely we will start to see the number drift back down. One reason claims have been elevated as of late is because auto makers that usually take July to do auto retooling at the plant moved that forward to June.
“The labor department probably doesn’t take that into account. We do think from anecdotal evidence from Toyota and other automakers that hiring will go up in July.”
TROY DAVIG, SENIOR U.S. ECONOMIST, BARCLAYS CAPITAL, NEW YORK:
“This is roughly in line with expectations. This reflects lingering softness in Q2 from some of the temporary factors. The job market is still going sideways.
“Payroll growth is going to be more like last month’s rather than first three months of the year. We think there’ll be about 100,000 in private job growth and 75,000 overall.”
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:
“Essentially the unemployed have been engaging in similar filing behavior for nearly a month now, where the moving average fine tuned between 426,250 - 426,750 in four of the past five weeks.
“This week’s corresponding moving average is no different at 426,750. There is nothing unusual manifested in these numbers, basically a mediocre report reflecting an uneventful week. Taken in a larger sense (adding today’s numbers to the picture coming together in the past two months), claims seem to have come off moderate-to-high swings shifting by 20,000-40,000 and slowed to modifications raising and lowering the level by no more than 10,000.”