October 18, 2012 / 12:47 PM / 5 years ago

Instant View: Weekly claims up sharply, distortion cited

(Reuters) - The number of Americans filing new claims for unemployment benefits rose last week, reversing a sharp decline in the prior week but still pointing to a labor market that is slowly healing.

KEY POINTS: * Initial claims for state unemployment benefits rose 46,000 to a seasonally adjusted 388,000, the Labor Department said on Thursday. * The prior week’s figure was revised up to show 3,000 more applications than previously reported to 342,000. * A Labor Department official said it appeared that state-level administrative issues were distorting the data. * The government adjusts its readings for claims to take into account regular seasonal swings. Claims usually increase at the beginning of a quarter, but one state appears to be following a different pattern than normal in reporting its claims, which led to the wild fluctuations over the last couple of weeks, the official said.

COMMENTS:

GARY THAYER, CHIEF MACRO STRATEGIST, WELLS FARGO ADVISORS, ST. LOUIS, MISSOURI:

“The bond market did a little better on the jump in jobless claims but the Labor Department explained there was a seasonal adjustment problem so I don’t think there should be a lasting impact. If you look at the four-week average, it’s at a level that would suggest slow, modest job growth.”

RUSSELL PRICE, SENIOR ECONOMIST, AMERIPRISE FINANCIAL, DETROIT:

”We’re still in a range... which still shows that the labor market is improving but improving at a slower than desired pace.

”What it really shows is that businesses are really running with very lean labor force levels. We’re unlikely to see a big jump in layoff activity or new claims, even though job growth should remain relatively modest.

“Businesses have clearly become more concerned about the fiscal cliff, but since they’re already running with a tight labor structure, they just don’t have the available capacity to cut heads in order to improve profit margins, they’re just going to have to wait this period out.”

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:

”The swing between last week and this week has to do with a timing issue so the important thing to look at is the moving average and it turns out the average flow of new claims in the new payroll month, October, which just ended, matches the situation in the first two weeks of the month which was before the distortion. So it’s a wash.

“The situation in the first two weeks of the payroll month was still showing a good improvement: New jobless claims declined from September to October. Apart from the timing issue, you get a message that layoffs fell significantly between September and October on a payroll-month basis. It does look like the labor market is improving at least in that respect.”

YELENA SHULYATYEVA, ECONOMIST, BNP PARIBAS, NEW YORK:

“The rise in claims were more than expected but the rebound itself was expected. It looks like California didn’t report last week. This is survey week for the monthly payroll report as well. The four-week moving average shows some improvement from last week and is lower than the four-week moving average during the survey week last month. We could see some small improvement in payrolls this month. Continued claims fell so that’s positive. Things are getting better in the labor market, but only slowly.”

JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDE MARKETS, WOODCLIFF LAKE, NEW JERSEY:

“Jobless claims reverted to trend at 388,000, last week’s large drop was statistical. Improvement in the labor market will continue to be fitful and slow.”

URI LANDESMAN, PRESIDENT, PLATINUM PARTNERS IN NEW YORK:

“On the one hand, you never want to respond too much to one data point, but on the other, this market is priced for perfection. I’ve expected the market to crack 100 times; we have to go down on this. This could be the start of a correction.”

Americas Economics and Markets Desk; +1-646 223-6300

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