The number of applications for unemployment benefits in the U.S. climbed last week to a two-month high, a sign of more moderate labor market progress.
Initial jobless claims increased by 11,000 to 276,000 in the week ended March 26, the highest since the end of January, a report from the Labor Department showed on Thursday. The median forecast in a Bloomberg survey called filings to hold at 265,000.
The data may indicate that improvement in the labor market, which has been the strongest part of the economy lately, is being tempered by still-weak manufacturing, flagging business investment and soft consumer spending. Initial claims would still need to show a sustained trend higher to confirm that layoffs are on the rise.
“Claims are still low — just given normal volatility, it’s not much of a change,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, who is among the best forecasters of the filings. “The overall takeaway is that claims remain low which is consistent with no letup in labor market improvement.”
Jobless claims have been below 300,000, a level economists associate with a healthy labor market, for 56 consecutive weeks. That’s the longest since 1973.
Economists’ estimates in the Bloomberg survey for weekly jobless claims ranged from 260,000 to 278,000.
No states estimated data last week and there was nothing unusual in the data, according to the Labor Department.
The four-week moving average of claims, a less volatile measure than the weekly figures, increased to 263,250 from 259,750.
The number of people continuing to receive jobless benefits fell 7,000 in the week ended March 19 to 2.17 million, the lowest level since mid-October. The unemployment rate among people eligible for benefits held at 1.6 percent. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings, and a sustained low level of applications has typically coincided with faster job gains. Layoffs can also reflect company- or industry-specific causes, such as cost-cutting or business restructuring.
Avon Products Inc., the cosmetics company, said March 14 it will eliminate about 2,500 jobs across multiple geographies. Avon plans to move its corporate headquarters to the U.K. as part of a cost-cutting push, aiming to save as much as $70 million by 2017.
Federal Reserve policymakers are watching labor-market indicators to gauge how global risks are affecting the economy. In a speech to the Economic Club of New York on Tuesday, Chair Janet Yellen said it is appropriate for U.S. central bankers to “proceed cautiously” in raising interest rates.
“On balance, overall employment has continued to grow at a solid pace so far this year, in part because domestic household spending has been sufficiently strong to offset the drag coming from abroad,” she said. “Looking forward however, we have to take into account the potential fallout from recent global economic and financial developments, which have been marked by bouts of turbulence since the turn of the year.”
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