U.S. initial jobless claims rise above expectations, but continue to suggest sound labor market

The initial jobless claims in the U.S. for the week ended 26 November surged to 268,000, quite above the consensus expectations of 253,000. The four-week moving average also increased modestly to 252,000. There was also a rise recorded in the continuing claims that reached 2081k from 20143k in the week ended 19 November.

The rise in last week’s claims is likely due to difficulties with seasonal adjustment. The data include Thanksgiving, and therefore, both the early month fall in claims and the more recent rebound might reflect issues with seasonal adjustment, noted Barclays in a research report. However, this week’s number is the highest since June, and with this rise, claims have not indicated any sustained rebound this year.

State wise, the increase in claims was again driven by California, where seasonally adjusted claims rose slightly over 6000 on the week. The remainder of the rise is linked to small increases throughout a large number of states. Continuing claims continue to suggest a very sound national labor market, with the huge majority of states witnessing ongoing declines, stated Barclays.

In spite of this week’s rise, the ongoing low level of claims are expected to give the FOMC comfort that the U.S. labor market continues to tighten and that they continue to make progress toward the committee’s labor market objectives. Overall, the incoming claims data is quite supportive of additional improvement in labor market conditions in 2016, according to Barclays.