The number of Americans filing first-time applications for unemployment benefits unexpectedly increased last week, indicating the U.S. job market is struggling to mend.
Jobless claims rose by 13,000 to 462,000 in the week ended Oct. 9, Labor Department figures showed today in Washington. The total number of people on unemployment insurance rolls decreased to the lowest level since November 2008, while those getting extended benefits declined.
Persistent dismissals show it will take longer for employers to add enough workers to reduce unemployment that’s close to a 26-year high. The prospect of joblessness holding above 9 percent through next year is among the reasons Federal Reserve policy makers may ease monetary policy.
“The real problem is a lack of job growth,” Scott Brown, chief economist at Raymond James & Associates, said before the report. “The good news is we’re not seeing the level of layoffs that would be consistent with a double-dip recession. The bad news is we really could be a lot stronger at this point and that’s going to take some time.”
Economists forecast claims would hold at 445,000, according to the median of 47 projections in a Bloomberg News survey. Estimates ranged from 425,000 to 455,000.
The four-week moving average of claims, a less volatile measure, rose to 459,000 from 456,750. It was the first increase since the week ended Aug. 21.
The number of people continuing to receive jobless benefits dropped by 112,000 in the week ended Oct. 2 to 4.4 million, the lowest in almost two years.
The continuing claims figure does not include the number of Americans receiving extended and emergency benefits under federal programs. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 340,000 to 4.8 million in the week ended Sept. 25.
“We’re at the neutral level of claims with the labor market not growing and not shrinking,” Ellen Zentner, senior macro economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York said before the report. The moving average holding below 450,000 “would be indicative of a more healthy expanding market.”
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 3.5 percent in the week ended Oct. 2 from 3.6 percent in the prior week.
Thirty-nine states and territories reported an increase in claims, while 14 reported a decline. These data are reported with a one-week lag.
Payrolls in September
Private employers in September added 64,000 workers, while total payrolls fell a larger-than-forecast 95,000, Labor Department figures showed Oct. 8. The unemployment rate held at 9.6 percent. It reached a 26-year high of 10.1 percent in October 2009.
The drop in U.S. payrolls in September largely reflected local governments firing educators and other workers to make up for declining tax revenue. Struggles to keep state and local government budgets balanced likely will continue to weigh on job growth and sustain the level of weekly jobless claims.
Last week’s jobs report was the last before the Nov. 2 congressional elections that threaten to deprive the Democrats of their majorities in the House and Senate partly because of voter disenchantment and Congress and President Barack Obama’s handling of the economy. Obama’s job approval over a three-day period that ended Oct. 6 was 46 percent, compared with 53 percent at the same time last year, according to a poll from Princeton, New Jersey-based Gallup Inc.
“We need to continue to explore ways that we can help states and local governments maintain workers who provide vital services,” Obama said last week in Bladensburg, Maryland. “At the same time, we have to keep doing everything we can to accelerate this recovery.”
Halozyme Therapeutics said Oct. 11 it will decrease new- compound research, cutting about 25 percent of its workforce. The company had 139 employees at the end of last year.
While some companies are still firing employees, others are recalling workers. American Airlines, the third largest U.S. airline, plans to recall 545 flight attendants and 250 pilots to meet demand for international flights as it begins it begins an alliance with British Airways Plc and Spain’s Iberia.
© Copyright 2017 Bloomberg News. All rights reserved.