Economists say the jobless claims survey for the week ending Sept. 6 suggests that labor market conditions will remain weak for several months. The pace of initial claims has remained above the 400k threshold for eight weeks now, and it is becoming more likely with each week that the elevated levels represent more than just an upward bias from new rules making it easier to file a claim.
Initial jobless claims came in at 445k in the survey, down 6k from the 451k claims in the prior week, and putting the four-week average at 440k.
Dave Resler, chief economist at Nomura Securities, said the number of new claimants in recent weeks "has included an indeterminate number of people who had only recently become aware that they were eligible for benefits," putting an upward distortion in the figures. But he said that distortion is probably diminishing with each week.
"Consequently, it is likely that (the) sharp increase in the 4-week average of claims since late June reflects a contemporaneous deterioration of the labor market. Reinforcing that assessment, the number of people continuing to collect benefits topped 3.5 million for the first time in five years," he said.
Continuing claims set a new cyclical high in the week ending Aug. 30, rising by 122k to 3.525 million.
Senior U.S. economist Paul Ashworth from Capital Economics added, "The longer claims remain well above the 400,000 mark, the less likely it is that the recent upsurge is due to a distortion caused by refiling claims."
This is the 18th consecutive week that continuing claims have been above the 3 million mark. The four-week moving average is now 3.429 million, up from the moving average of 3.392 million in the previous week.
"In short, labor market conditions are deteriorating, and they are bound to get worse over the next few months," said Ian Shepherdson, chief U.S. economist at HFE.
By Patrick McGee
©CEP News Ltd. 2008