U.S. Jobless Claims Hit 14-month High; Analysts Blame Verizon Strike
The number of Americans filing for unemployment benefits rose last week to a more than one-year high, but economists blamed striking telecommunications workers for the surge and said the data did not signal a deterioration in the overall labor market.
Another report on Thursday showed import prices increased in April for a second straight month, suggesting the disinflationary impulse from a strong dollar and lower oil prices, which has helped to hold inflation well below the Federal Reserve's 2 percent target, was fading.
Initial claims for state unemployment benefits increased 20,000 to a seasonally adjusted 294,000 for the week ended May 7, the highest level since late February 2015, the Labor Department said. It was the third consecutive week of increases in first-time applications for jobless benefits.
"We have to look past the noise in the latest jobless claims number because it was likely influenced by the Verizon strike. The broader underlying trend in claims remains very constructive," said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.
RBC Capital Markets said first-time applications for jobless benefits would have fallen last week excluding the impact of the strike. About 40,000 Verizon workers walked off the job in mid-April.
Other economists blamed the spike in claims on difficulties adjusting the data due to seasonal variations and other factors.
Unadjusted jobless claims last week surged in New York state and Pennsylvania, which economists tied to the Verizon dispute. Unadjusted claims increased in Michigan.
"New York state provides unemployment insurance benefits for striking workers when an employer hires permanent replacement workers," said Jesse Hurwitz, an economist at Barclays in New York. "Verizon reportedly increased the ranks of replacement workers in the past two weeks, which we believe made striking workers eligible."
Economists polled by Reuters had forecast initial claims slipping to 270,000 in the latest week.
Job market still firm
Despite the jump last week, claims have now remained below 300,000, a threshold associated with a healthy labor market, for 62 straight weeks, the longest stretch since 1973.
The dollar .DXY was trading higher against a basket of currencies, while prices for U.S. government bonds slipped. U.S. stocks fell as shares of Apple (AAPL.O) dropped to a near two-year low.
The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, increased 10,250 to 268,250 last week, the highest level in almost three months.
Coming on the heels of data last week showing nonfarm payrolls increased only 160,000 in April, the smallest gain in seven months, the claims report could raise concerns that the labor market was slowing.
The labor market has been fairly robust despite a sharp slowdown in economic growth in the first quarter. A report on Tuesday showed job openings hit an eight-month high in March, with the rate re-testing its post-recession high.
"The claims data ... have increased significantly over the most recent three weeks and this does suggest that the labor market has deteriorated lately," said Daniel Silver, an economist at JPMorgan in New York.
"But we do not want to read too much into the individual weekly figures, especially around this time of year."
In a second report, the Labor Department said import prices increased 0.3 percent last month after a similar gain in March. The rise last month reflected a pick-up in oil prices and the dollar's depreciation.
"We think the declines in headline and nonfuel import prices are likely behind us and import prices will probably be less of a restraining factor on domestic inflation going forward," said John Ryding, chief economist at RDQ Economics in New York.
(Reporting by Lucia Mutikani; Editing by Paul Simao)