The Economy

Unemployment Claims Climb to Five-Month High

But the unemployment claims didn't affect sentiment that the U.S. Federal Reserve will raise interest rates next week.
Matthew HellerDecember 10, 2015

The number of Americans filing for unemployment benefits rose to a five-month high last week. But that and other economic reports did not affect sentiment that the U.S. Federal Reserve will raise interest rates next week.

Initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 282,000 for the week ended Dec. 5, the highest level since early July, the Labor Department reported. Reuters said the increase “likely does not signal a deterioration in the labor market,” noting that the four-week moving average of claims rose only 1,500 to 270,750 last week.

Further, claims have now been below the 300,000 threshold, which is normally associated with healthy labor market conditions, for 40 straight weeks — the longest stretch since the early 1970s.

“As we approach the end of the year, jobless claims have a tendency to be more volatile due to seasonal adjustment issues around the holidays. The message remains that the pace of layoffs is very low,” John Ryding, chief economist at RDQ Economics in New York, told Reuters.

In another report, the Labor Department said import prices fell 0.4% last month after decreasing 0.3% in October. Import prices have dropped in 15 of the last 17 months, and were down 9.4% in the 12 months through November.

Reuters reported that “dollar strength and a sharp decline in oil prices have dampened inflation, leaving it running well below the Federal Reserve’s 2% target.” Last month, imported petroleum prices fell 2.5% after rising 0.4% in October.

But there are hopes, Reuters wrote, that “labor market tightness will spur faster wage growth and gradually push inflation toward [the Fed’s] target.”

The unemployment claims report showed that the number of people still receiving benefits after an initial week of aid increased 82,000 to 2.24 million in the week ended Nov. 28. The four-week moving average of the so-called continuing claims rose 16,500, to 2.18 million.

“The labor market resilience, despite slowing consumer spending and housing market activity, is likely to give the Federal Reserve confidence to raise interest rates next Wednesday for the first time in nearly a decade,” Reuters said.