The number of people filing for first time unemployment benefits spiked higher in the latest week, continuing a sharp upward trend that began during the first part of this new year. This comes after witnessing tempered declines during the holiday-shortened weeks, according to the US Department of Labor. For the week ending January 31st, initial jobless claims came in at 626,000, an increase of 35,000 from the previous upwardly-revised reading of 591,000. This was a quite a surprise, as economists were expecting 583,000 new claims for the week. Initial claims running consistently atop the 350,000 mark would signal some weakening in the labor market. Claims above 400,000 are seen by many as a signal of recession.
Initial jobless claims are at their highest levels since the recession of 1982, touching a 26-year high.
Having witnessed extremely volatile measurements in the past few weeks, it is wise to consider the four-week moving average of initial claims, which smooths out one-time factors such as bad weather or holidays. The four-week average continued its trek upwards, rising by 39,000 to 582,250. It is now at the highest level since Dec. 4, 1982.
Continuing jobless claims rose by 20,000 in the week ended Jan. 24 to a seasonally adjusted 4.79 million, the most since the government’s records began in 1967. – MarketWatch.
The underlying trend in claims is still rising, and could reach a peak of 750,000, according to Ian Shepherdson, chief U.S. economist with High Frequency Economics.
It is pretty obvious now that businesses are laying more employees off, and at a faster pace, and that the unemployed are having a tougher time looking for a replacement job. A year ago, initial claims were at 366,000.
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