US jobless claims jump, but labor market remains strong
US jobless claims last week posted their biggest increase in more than a year, but analysts say the labor market is continuing to strengthen.
The Labor Department reported on Thursday that initial claims for state unemployment benefits increased 17,000 to a seasonally adjusted 274,000 for the week ended April 30. It was the largest increase since February 2015.
The numbers topped the 260,000 consensus estimate of economists polled by Reuters. For the past 61 weeks, jobless claims have been below 300,000, the threshold associated with healthy labor market conditions. It’s the longest stretch since 1973.
The four-week moving average of claims, considered a better measure of labor market trends, as it irons out week-to-week volatility, rose 2,000 to 258,000 last week.
“We are assuming the move in claims is largely technical. By all accounts, businesses cannot find the skilled labor they need,” Chris Rupkey, chief financial economist at MUFG Union Bank in New York told Reuters.
Another report released on Thursday showed planned layoffs by US-based employers surged 35% last month. Global outplacement firm Challenger, Gray & Christmas said U.S.-based companies cut 65,141 jobs last month, up 35% from March.
Most of the announced job cuts were concentrated in the energy sector, which is suffering under the huge drop in oil prices. The energy sector announced 19,759 job cuts in April, for a yearly total of 72,660. The information technology and retail sectors also posted significant layoffs.
“It is not unusual to see heavy job cuts in a strong economy. Companies are constantly retooling, and sometimes the best time to do that is when the economy is strong,” said John Challenger, the chief executive officer of Challenger, Gray & Christmas.
Claims were generally low in April compared to March. That points to a fairly robust labor market despite a report on Wednesday showing hiring by employers in the private sector last month was the weakest in three years. On Wednesday, the ADP National Employment Report showed a slowdown in services industry hiring last month.