The number of Americans filing applications for unemployment benefits jumped to more than a two-year high last week, but that probably does not signal a pickup in layoffs as the claims data tends to be volatile in the period following the Thanksgiving Day holiday.
Initial claims for state unemployment benefits surged 49,000 to a seasonally adjusted 252,000 for the week ended Dec. 7, the highest reading since September 2017, the Labor Department said on Thursday. The increase was the largest since August 2017.
Claims dropped to 203,000 in the prior week, which was a seven-month low. The decline likely reflected a late Thanksgiving Day this year compared to 2018, which could have thrown off the model used by the government to strip out seasonal fluctuations from the data.
Economists polled by Reuters had forecast claims would increase to 213,000 in the latest week. The Labor Department said only claims for the Virgin Islands were estimated last week.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 6,250 to 224,000 last week. The underlying trend in claims remains consistent with a strong labor market.
The government reported last week that the economy added 266,000 jobs in November, the most in 10 months. The unemployment rate fell back to 3.5%, the lowest in nearly half a century. Labor market strength is driving consumer spending, keeping the economy on a moderate growth path despite headwinds from trade tensions and slowing global growth.
The Federal Reserve on Wednesday kept interest rates steady and indicated borrowing costs could remain unchanged at least through 2020 amid expectations the economy would continue to grow modestly and the unemployment rate remain low.
Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid dropped 31,000 to 1.67 million for the week ended Nov. 30. The four-week moving average of the so-called continuing claims fell 6,250 to 1.68 million.