Jobless claims grow by 15,000 to 297,000, most since February

In this photo taken, June 30, 2015, New York State Trooper Maxine Mendez, left, speaks to Xiaojiao Zuo, of Queens, about employment opportunities during a U.S. Chamber of Commerce Foundation Hiring Our Heroes jobs expo at Citi Field in New York. The Labor Department releases weekly jobless claims data on Thursday, July 9, 2015.
In this photo taken, June 30, 2015, New York State Trooper Maxine Mendez, left, speaks to Xiaojiao Zuo, of Queens, about employment opportunities during a U.S. Chamber of Commerce Foundation Hiring Our Heroes jobs expo at Citi Field in New York. The Labor Department releases weekly jobless claims data on Thursday, July 9, 2015.

WASHINGTON -- The number of Americans filing for unemployment benefits rose last week to the highest level since February, representing a pause in the pace of labor-market improvement as the nation's automakers begin temporary plant shutdowns.

The number of people filing applications for unemployment benefits rose by 15,000 to 297,000, the Labor Department reported Thursday. That is the highest weekly total since 327,000 applications were filed in the week of Feb. 28.

Even with the recent increases, benefit applications, which are a proxy for layoffs, remain at low levels that reflect a labor market that has been posting solid employment gains. The four-week average for claims, which smooths out some of the volatility, rose to 279,500, up slightly from 275,000 the previous week. It was the highest level for the four-week average since early May.

"I'm not seeing a pop in claims data as a significant sign things are deteriorating," said Tom Simons, a money-market economist at Jefferies LLC in New York. Applications are at a level that "suggests the labor market slack is continuing to decline and conditions are tightening overall."

One of the states posting a large jump was Michigan, home to many U.S. auto plants, which typically see plant shutdowns in the summer to retool for a new model year.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said that for a few weeks, the unemployment-claims data would be distorted by the temporary auto plant shutdowns.

"We have no reason at all to think that the underlying trend in claims has changed and once the shutdowns are over we'd expect claims to revert to [280,000] or so," he said in a research note. "In the meantime, anything can happen over the next couple of weeks."

The number of people receiving benefits stood at 2.33 million for the week ending June 27, up from the previous week but 9.9 percent lower than a year ago.

The government reported last week that the unemployment rate fell to a seven-year low of 5.3 percent in June, while employers added 223,000 jobs.

Other labor market indicators have not performed as well -- a fact that Federal Reserve Chairman Janet Yellen often cites in explaining why the central bank has not yet begun raising interest rates. In June, wage growth stalled, with hourly wages up just 2 percent over the past 12 months.

And the unemployment rate fell for the wrong reason: Many people out of work apparently got discouraged and gave up looking for a job. The government doesn't count people as unemployed unless they are actively seeking work.

The Fed released minutes of its June meeting on Wednesday. They revealed that the central bank officials were seeing signs that the U.S. economy was recovering from its winter slump. But at the same time officials were concerned about lingering weakness at home and the threat of troubles overseas, including weaker growth in China and a stalemate in the Greek debt negotiations.

Given that those problems have gotten worse in recent weeks, many analysts believe that the Fed's first interest rate increase won't happen until December.

Another report showed household confidence eased last week from the highest level since April. The Bloomberg Consumer Comfort Index cooled to 43.5 in the period ended Sunday from 44 a week earlier. Views of the economy and buying climate were more subdued.

"Consumer sentiment flattened this week after a three-week advance, perhaps reflecting concerns about global economic stability," Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement.

Information for this article was contributed by Martin Crutsinger of The Associated Press and by Victoria Stilwell of Bloomberg News.

Business on 07/10/2015

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