Washington DC, January 31, 2019 – The number of Americans filing applications for unemployment benefits surged to near a 1-1/2-year high last week, which could raise concerns that the labor market is slowing.
Claims dropped to 200,000 in the prior week, which was the lowest level since October 1969. Economists polled by Reuters had forecast claims rising to only 215,000 in the latest week.
The claims data covered the Martin Luther King holiday. While claims tend to be volatile around holidays, last week’s big jump could be flagging a moderation in job growth.
The surge could also reflect filings by non-federal government workers who were temporarily unemployed during the partial government shutdown that recently ended. The Labor Department said no states were estimated last week.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 5,000 to 220,250 last week.
The claims data has no bearing on January’s employment report, which is scheduled for release on Friday, as it falls outside the survey period. According to a Reuters survey of economists, non-farm payrolls likely increased by 165,000 jobs in January after jumping by 312,000 in December.
The five-week partial government shutdown is not expected to have an impact on January’s job growth, as workers who were furloughed will be paid retroactively together with colleagues who worked without pay.
However, these workers who stayed at home during the longest government shutdown in U.S. history are expected to temporarily push up the unemployment rate in January.
The Federal Reserve on Wednesday kept interest rates steady but said it would be patient in lifting borrowing costs further this year in a nod to growing uncertainty over the economy’s outlook. The U.S. central bank removed language from its December policy statement that risks to the outlook were “roughly balanced.”
Business and consumer confidence have weakened, with some of the deterioration linked to the government shutdown.
Thursday’s claims report showed the number of people receiving benefits after an initial week of aid increased 69,000 to 1.78 million for the week ended Jan. 19. The four-week moving average of the so-called continuing claims gained 8,000 to 1.74 million.