The U.S. Department of Labor has reported that weekly applications for unemployment benefits rose by 46,000 claims last week reaching the highest level in four months. The sharp increase is due to a rebound effect from the previous week’s fall. The four-week claims average rose to 365,000, which is consistent with modest hiring. Both high and low swings are blamed on technical factors such as processing times for delayed applications.
As an indication of layoffs, application numbers that fall below 375,000 per month typically suggest an employment market healthy enough to lower the unemployment rate. Since the rate of applications continued a slight downward trend, hiring is expected to be a bit better in October.
“Though still struggling, the U.S. labor market appears to be making headway, and we should see a modest improvement in October … payrolls,” Sal Guatieri, an economist at BMO Capital Markets.
For the week ending September 29, a little over 5 million people received unemployment benefits, about 40,000 less than the previous week. Retail sales also grew in September at a convincing rate and new house and apartment construction grew at a pace not seen in over four years. Despite the healthy growth in some major sectors, the economy is still not growing fast enough to spur much hiring. In Q2 2012, the economy slowed to an annual growth rate of 1.3 percent, down from 2 percent in the previous quarter. The rate is expected to remain at or below 2 percent for the remainder of the year.