Applications for US unemployment benefits climb

Initial jobless claims climbed 15,000 to a seasonally adjusted 297,000 in the period stretching from June 28 to July 4, the government said Thursday.

Which is to say: things may not be as bad as they look.

WASHINGTON: New applications for U.S. unemployment insurance benefits rose last week to their highest level since February, suggesting some slowdown in the labor market recovery. At the very least, it is not good news and reinforces skepticism about the jobs recovery which is the foundation of the Fed’s hopes for slowly raising interest rates.

The Labor Department reports on the number of people who applied for unemployment benefits last week at 8:30 a.m. Eastern Thursday.

Week per week, the jobless claims can be unpredictable, specifically around holidays when there are shortened workweeks. Stronger demand could help persuade some other employers to increase hiring and to assure employers about the outlook for the U.S.in the face of weaker foreign economies overseas.

The average for claims for four weeks, often considered a less volatile gauge than the figures released weekly, increased from 275,000 to 279,500 the prior week.

The bigger than expected decrease pulled the unemployment rate down to its lowest level since hitting 5.0% in April of 2008.

One of the states posting a large jump was Michigan, home to many USA auto plants, which typically see plant shutdowns in the summer to retool for a new model year.

“We have no reason at all to think that the underlying trend in claims has changed and once the shutdowns are over we’d expect claims to revert to 280K or so”, Ian Shepherdson, chief economist at Pantheon Macroeconomics Ltd.in Newcastle, England, said in a note to clients.

The labor market has been tightening, with the unemployment rate not too far from the 5.0 per cent to 5.2 per cent range that most Federal Reserve officials consider consistent with full employment.