Applications for jobless benefits rose higher than predicted during the week ending January 25, reaching the highest level in over a month. The surge comes after a modest slump following the holidays. Claims spiked by 19,000 to 348,000 for the period while the median forecast by Bloomberg-surveyed economists was at 330,000.
“Weekly layoffs have been low over the past month,” Ryan Wang, an economist at HSBC Securities USA Inc. in New York. “Consumers are gradually becoming less pessimistic about the labor market.”
Meanwhile, the economy expanded at a 3.2 percent annual rate during the fourth quarter of 2013, tailing a 4.1 percent advance during Q2, the strongest six-month growth in nearly two years. The four-week average of unemployment claims increased to 333,000, up from 332,250 over the prior week. The number of people continuing to receive benefits sank by 16,000 to 2.9 million for the week ending January 18.
Employers added 74,000 jobs in December for the smallest gain since January 2011 and less than even the most conservative estimates. However, payrolls are expected to rise by about 200,000 per month during 2014, the median prediction among Bloomberg-surveyed economists. The Federal Reserve is also primed to continue tapering its bond buying program as it plans to reduce its monthly expenditure to $65 billion (down from $75 billion in January).
A statement from the Federal Open Market Committee, the last to be chaired by out-going Ben Bernanke, said, “Labor market indicators were mixed but on balance showed further improvement.”