US jobless claims edge up; labor market still improving

After reporting modest increases in first-time claims for U.S. unemployment benefits over the past few weeks, the Labor Department released a report on Thursday unexpectedly showing another uptick in initial jobless claims in the week ended August 15th.

“While the claims numbers are expected to remain near a four-decade low, August nonfarm payrolls could disappoint given their historical tendency to do so”. The prior week’s claims were revised down from 274,000 to 273,000.

Initial jobless claims reflect weekly firings and typically decrease before job growth can accelerate. The dollar dipped against a basket of currencies.

Still, the general trend is toward momentum in the labor market, and if that continues, the Fed could raise interest rates later this year.

To smooth the weekly volatility out, the four week-average is measured, and that figure climbed by 5,500 claims to 271,500. At a seven-year low of 5.3 percent, the unemployment rate is near the 5.0 percent to 5.2 percent range that most Fed officials think is consistent with full employment.

The economy created 215,000 jobs in July and has added an average 235,000 over the past three months. Wednesday’s Fed minutes showed that “many members thought that labor market underutilization would be largely eliminated in the near term”, but others anxious that tepid wage gains could mean it would take longer to achieve full employment.

The number of continuing claims, the army of the unemployed, reported with a one-week lag, fell by 24,000 to 2,254,000.