The drop in weekly initial jobless claims, which fell to a 2 1/2-year low of 391,000 two weeks ago, has come to a screeching halt, according to the latest data.
The Department of Labor reported today that weekly claims increased 35,000 to 445,000, while the 4-week moving average gained 5,500 to 416,500.
The rise we’ve seen over the past two weeks would normally be troubling, but according to Bloomberg News, special factors contributed to the rise.
“The Labor Department believes the week's surge reflects administrative backlog built up during the shortened weeks of the holidays. They also note that many claimants postponed filing until the New Year, a move that will increase their benefits.”
Although the government attempts to account for seasonality around the holidays, unforeseen factors can sometimes muddy the data, and the Labor Department’s explanation seems reasonable.
Last year, however, similar explanations were given during the first weeks of 2010, and when claims remained at elevated levels in February, nasty winter weather was cited. Eventually, it became clear that growth in the economy was not accelerating, and stubbornly high jobless claims were not due to an special factors.
This time around, similar trends are bear watching, and we should know soon enough whether quirks surrounding Christmas and New Years were the reason for the jump.
Still, given an improvement in most data, with the exception of housing which will remain a drag on growth, a downward drift in jobless claims is probably the most likely path during the current quarter.
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