US president, Barack Obama
The number of Americans filing new claims for unemployment benefits spiked last week, reversing a sharp decline in the prior week but still pointing to a labor market that is slowly healing.
Initial claims for state unemployment benefits rose 46,000 to a seasonally adjusted 388,000, the Labor Department said on Thursday.
Many economists believe a reading below 400,000 points to an improving labor market. The four-week moving average of new claims, which smoothes out volatility and is considered a better measure of labor market trends, rose just 750 last week to 365,500, reports Reuters.
"Improvement in the labor market will continue to be fitful and slow," said Joseph Trevisani, a market strategist at Worldwide Markets in Woodcliff Lake, New Jersey.
The government last week reported claims fell an unusually large 30,000 to 339,000 in the October 6 week, the lowest level in more than four years. But a Labor Department official said it appeared that state-level administrative issues were distorting the data at the start of October.
The government adjusts its jobless claims figures to take into account regular seasonal swings. Claims usually increase at the beginning of a quarter, but one state appears to be following a different pattern than normal in reporting its claims, which led to the wild fluctuations recently, the official said.
The official declined to name the state, although the Labor Department said that California was the only state in the week ending October 6 to report a decrease in claims of more than 1,000.
The department on Thursday revised its data from last week to show 342,000 new claims, a still-sharp drop from the prior week.
The distortions could make it hard to assess if the claims data will point to an improvement in hiring in October.
Last week was the same period used by the Labor Department to survey employers and calculate how many workers were added to payrolls in October.
The four-week moving average of new jobless claims was lower than the moving average of 378,500 in the payrolls survey week in September.
"It does look like the labor market is improving at least in that respect," said Pierre Ellis, an economist at Decision Economics in New York.
The economy has recently shown signs of modest strength, with the unemployment rate falling to 7.8 percent in September and retail sales pointing to a pick-up in consumer spending.
Stock futures added to losses after the initial claims data, while yields on U.S. Treasury debt fell to session lows.