Initial Weekly Claims Rise 26,000
(Initial claims article updated with additional information, analyst commentary)
NEW YORK (
) -- The number of Americans filing unemployment claims for the first time rose more than expected last week, the Labor Department said early Thursday.
The advance figure for seasonally adjusted initial claims increased by a higher-than-expected 26,000 to 436,000 in the week ended Nov. 27, from the previous week's upwardly revised estimate of 410,000. Analysts were expecting initial claims to rise to 422,000, after it dropped to 407,000, its lowest level since July 2008 in the previous week.
The number of Americans filing continuing claims -- those who have been receiving unemployment insurance for at least a week -- came in higher than expected at 4.27 million for the week ended Nov. 20, an increase of 53,000 from the previous week's revised figure of 4.217 million. Consensus estimates projected continuing claims to come in at 4.2 million.
The four-week moving average in initial claims, which smoothes the volatility in week-to-week reports, was 431,000, a decrease of 5,750 from the previous week's revised average of 436,750. The four-week moving average in continuing claims was 4.288 million, a decrease of 29,250 from the preceding week's revised average of 4.317 million. The numbers do not include millions of those who claim benefits under the extended unemployment benefits program.
The advance seasonally adjusted insured unemployment rate was 3.4% for the week ending Nov. 20, unchanged from the previous week's upwardly revised level of 3.4 percent.
The
SPDR Dow Jones Industrial Average
(DIA) - Get Report
and the
SPDR S&P 500 ETF
(SPY) - Get Report
were rising slightly at the open, up 0.1% and 0.2% respectively while the
PowerShares QQQ
(QQQQ)
was up 0.2%.
Markets soared on Wednesday after the ADP reported stronger-than-expected growth in private sector payrolls. That has set expectations higher for the Labor Department's Employment Situation Report on Friday. Nonfarm payrolls are expected to rise by 145,000 for the second month in a row, according to consensus estimates from
Bloomberg
.
Initial weekly claims have remained below 450,000 for the last four weeks, a sign that layoffs are on the decline. The four-week moving average continues to edge lower as well.
Still, constant fluctuations in the data and a stubbornly high unemployment rate of 9.6% have done little to assuage concerns on unemployment.
Analysts are also concerned that some of the recent improvements in the jobs numbers has been a result of temporary hiring by the retail industry in anticipation of the holiday season. That could mean a less encouraging jobs report in January, when the effect of temporary hiring wanes.
Signs of improving consumer confidence and spending have also encouraged expectations of an improving job outlook. On Wednesday, the
Federal Reserve
said in its beige book report that economic activity improved in most regions and reports of consumer spending and expectations of a holiday spending were positive.
With consumer spending being crucial to job growth, investors are hoping Congress will vote to extend the Bush tax cuts, particularly for the middle-income and lower-income consumers. President Obama appointed Treasury Secretary Tim Geithner and budget director Jack Lew to work with members of both parties to resolve the issue.
Another crucial debate in Congress that could have more immediate repercussions on holiday spending is the issue of extending federally funded unemployment insurance benefits. Last year, Congress passed legislation to extend payment of unemployment insurance benefits for 99 weeks. That period expired in November. Unless Congress votes to renew the payment of benefits, 2 million people stand to lose aid by the end of this year.
Extending the benefits would mean a bigger drain on the Government finances, but allowing them to expire would hurt consumer spending.
Christopher Low, economist with FTN Financial, says the expiry of the benefits in teeth of Christmas would impact holiday spending and retailers. Over the long term, however, he believes expiry of unemployment benefits would be good for the economy.
"It is better for the economy if the unemployment benefits are allowed to expire. That is the ultimate incentive for people to go out and find jobs," said Low, adding that firms have been finding it difficult to fill entry level positions. "In the short-run, it will be painful."
--Written by Shanthi Bharatwaj in New York
>To contact the writer of this article, click here:
Shanthi Bharatwaj
.
>To follow the writer on Twitter, go to
.
>To submit a news tip, send an email to:
.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.