The number of Americans filing for unemployment benefits unexpectedly increased to a two-month high last week. Swings in jobless applications are typical in July as auto plants close for annual retooling.
First-time claims rose by 16,000 to 360,000 in the week ended July 6 from a revised 344,000, Labor Department figures showed today in Washington. The median forecast of 47 economists surveyed by Bloomberg called for a drop to 340,000. Claims are difficult to adjust in July for seasonal events such as vehicle plant shutdowns and the Independence Day holiday, a Labor Department spokesman said as the data were released.
Firings need to keep waning to lay the groundwork for a pickup in hiring once the effect of higher taxes and federal budget cutbacks fades in the second half of the year. Sustained job gains would help propel income growth and underpin household spending, the biggest part of the economy.
“July claims numbers get totally bounced around by the auto-plant shutdowns,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who correctly forecast the level of claims. “The labor market is showing steady progress. The pace of hiring is good.”
Another report from the Labor Department showed import prices fell for a fourth straight month in June as costs declined for food, natural gas and motor vehicles.
Stock-index futures maintained gains after the figures, with the contract on the Standard & Poor’s 500 Index expiring in September rising 0.9 percent to 1,664.1 at 8:45 a.m. in New York.
Economists’ estimates in the Bloomberg survey ranged from claims of 315,000 to 380,000 after an initially reported 343,000 the previous week.
There was nothing unusual in the data for last week and no states estimated jobless claims, the Labor spokesman said.
The four-week moving average, a less volatile measure than the weekly figures, climbed to 351,750 last week from 345,750.
The number of people continuing to receive jobless benefits rose by 24,000 to 2.98 million in the week ended June 29. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 22,700 to 1.65 million in the week ended June 22.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 2.3 percent in the week ended June 29, today’s report showed.
Thirty-three states and territories reported an increase in claims, while 20 reported a decline. These data are reported with a one-week lag.
Auto plants typically shut down to retool for the new model year, often playing havoc with the claims data in July.
“Claims could be in for a bumpy ride over the next couple weeks,” said Tom Simons, an economist at Jefferies LLC in New York. “Changes in production schedules in the auto sector could again cause some volatility in initial jobless claims, making the data difficult to interpret.”
Ford Motor Co. (F) said it will idle most of its North American assembly plants for one week this summer instead of two, to increase output. Three of Chrysler Group LLC’s assembly plants and all except one of its engine, transmission and stamping factories will skip a summer shutdown this year. Since its 2009 bankruptcy, General Motors Co. (GM) hasn’t had a formal summer shutdown, Mark Reuss, president of the company’s North American operations, told reporters in May.
GM and Ford, makers of the best-selling big pickups in the U.S., reported new-vehicle deliveries in June that topped estimates as the industry selling pace accelerated to the fastest in 67 months.
Initial jobless claims reflect weekly firings and typically wane before job growth accelerates.
Payrolls rose by 195,000 workers for a second month in June, indicating the U.S. is poised for faster growth as it shakes off the impact of tax increases and budget cuts. The jobless rate stayed at 7.6 percent, close to a four-year low.
Some companies are paring headcount. Sprint Nextel Corp. (S), the third-largest wireless carrier, said this week in a filing that it will exit some leases related to Clearwire Corp.’s commercial offices, cell towers and retail stores, and reduce employee headcount in connection with the merger. Clearwire shareholders on July 8 voted in favor of Sprint’s bid for full control of the wireless Internet operator.
Federal Reserve Chairman Ben S. Bernanke said last month that the central bank may start reducing the pace of bond buying this year and end the purchases around the middle of next year if the economy finally achieves the sustainable growth the Fed has sought since the recession ended in 2009.
Many Fed officials want to see more signs employment is picking up before they’ll begin scaling back $85 billion in monthly bond purchases, according to minutes of policy makers’ June meeting released yesterday.
Policy makers also project inflation will remain at or below their goal. Today’s Labor Department figures on import prices showed scant signs of cost pressures.
The import price index fell 0.2 percent in June after a 0.7 percent decrease. The median forecast of 44 economists in a Bloomberg survey called for no change. Prices rose 0.2 percent over the past 12 months after slumping 1.9 percent.
Excluding fuel, import costs fell 0.3 percent last month, and were down 1 percent from June 2012. Prices of imported auto dropped 0.3 percent from a month earlier, natural gas and food each fell 1.2 percent, and industrial supplies decreased 0.3 percent.
Demand for commodities may be limited as Europe and other global markets continue to struggle. American companies facing overseas competition for manufactured goods have little ability to raise prices.
The import-price index is the first of three monthly price gauges from the Labor Department. Producer prices are due tomorrow and the consumer-price index on July 16.