The upside surprise in U.S. initial jobless claims points to a continued deterioration of the U.S. labour market, and the possible loss of up to 750,000 jobs in February's official nonfarm payrolls report.
Initial claims rose to 667k in the week ending Feb. 21, well above the 625k level economists had expected. The previous week's reading was also upwardly revised to 631k, the U.S. Department of Labor reported.
Continuing claims rose above expectations as well, coming in at 5.112 million compared to the 5.025 million expected.
Ken Maylan of ClearView Economics called the rise in initial claims "painful," but noted that on an adjusted basis, weekly claims exceeded 1 million claims in the 1982 recession.
The continued increase in claims isn't likely to end any time soon, according to HFE economist Ian Shepherdson. However, he also noted that the current level is still well short of the peaks reached in the mid-1970s and early 80s.
"We fervently hope that does not happen but we are not confident," he said in a client note. "Companies are throwing in the towel as they recognize that no sector is safe."
As a result, Shepherdson is forecasting February's official nonfarm payrolls report to show a loss of up to 750,000 jobs. That would follow a record loss of 598,000 jobs in January, which boosted the unemployment rate 0.6 percentage points to 7.2%.
Also in Thursday's jobless claims report, the less volatile four-week moving average for initial claims rose to 639,000, up from 620,000 in the week prior, while the four-week moving average for continuing claims rose to 4.932 million, up from 4.843 million in the previous week.
By Stephen Huebl and edited by Sarah Sussman
©CEP News Ltd. 2009