Instant View: Jobless claims jump in latest week

NEW YORK (BestGrowthStock) – The number of U.S. workers filing new claims for jobless benefits unexpectedly soared last week as applications held back during the Easter holiday were processed, government data showed on Thursday.

A gauge of manufacturing in New York State rose to a six-month high in April as new orders advanced and employment continued to improve, the New York Federal Reserve said in a report on Thursday.

KEY POINTS:

JOBLESS CLAIMS: * Initial claims for state unemployment benefits rose 24,000 — the largest increase in two months — to a seasonally adjusted 484,000, the Labor Department said. * Analysts polled by Reuters had expected claims to dip to 440,000 from 460,000 the prior week, a number that was unrevised in Thursday’s report. * The four-week moving average of new claims, which irons out week-to-week volatility, rose 7,500 to 457,750.

EMPIRE STATE SURVEY: * The New York Fed’s “Empire State” general business conditions index rose to 31.86 in April, the highest since October and up from 22.86 in March. * Economists polled by Reuters had expected a figure of 24.00. * The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions. * The employment index rose to 20.25 in April, the highest since March 2006, and up from 12.35 last month. * New orders rose to a six-month high of 29.49 in April and up from 25.43 last month.

COMMENTS:

BILL JORDAN, U.S. SENIOR ECONOMIST, RIED THUNBERG ICAP, NEW YORK:

“I’m disappointed by this number (jobless claims). The Labor Department is downplaying the rise on seasonal adjustments. If it doesn’t come down again, it means that labor market is as strong as we had thought.

“(Empire state) is only one region but it’s stronger than we had expected. It’s still a solid report. It’s a step in the right direction.

“If the bulk of the regional (factory) reports coming out the rest of the month is similar, then we may have to push up our number for ISM (Institute for Supply Management U.S. index on manufacturing.).”

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:

“The appearance of a big decline in claims between March and April is fading with every week. Layoffs seems stable in April compared to March on a payroll basis. Our forecast for April payrolls growth is 50,000 to 100,000 jobs excluding census workers. So it’s a positive underlying increase. New hiring seems to be picking up.”

TIM GHRISKEY, CHIEF INVESTMENT OFFICER, SOLARIS ASSET MANAGEMENT, BEDFORD HILLS, NEW YORK:

“Empire state was certainly favorable. It does show manufacturing activity picked up considerably versus March and well above consensus, but that’s one state.

Today’s (jobless claims) were not good. Those were disappointing. They show initial claims rose above the prior period…and continuing claims, which had been on a trend down, also showed an increase. (Stock) futures, while already down, did sell off a bit on them. These are numbers that are being watched closely by a lot of investors to gauge the health of the economy.”

TOM SOWANICK, CHIEF INVESTMENT OFFICER, OMNIVEST GROUP, PRINCETON, NEW JERSEY:

“They (jobless claims) are considerably higher than what the market was expecting. I don’t know if this is a credible number. We’ve had too many weeks of weather-data collected problems and now we could have some administrative issues because of Easter. The high-frequency data is becoming less important than the monthly data.”

PHIL ORLANDO, CHIEF EQUITY MARKET STRATEGIST, FEDERATED INVESTORS, NEW YORK:

“I’m going to ignore the claims data. Last week and this there is probably some quirks in there relating to the Easter holiday and the Cesar Chavez holiday. I would be more inclined to focus on the Empire number, which I can’t even tell you how terrific it is.

“We get Philly Fed later as well and that is consistent with the two ISM’s we saw last week or the week before which is also consistent with the wholesale and manufacturing data points we’ve seen the past couple of days. So everything on the manufacturing side is clearly pointing to an acceleration. The consumer side, the retail sales data we saw yesterday was off the charts. So there is no reason for me to believe that the labor market has organically turned sour. I am willing to conclude there is some seasonal aberration in the claims data related to the holidays. Let’s give this a couple of weeks to let the dust settle.”

JAY MUELLER, SENIOR PORTFOLIO MANAGER, WELLS CAPITAL MANAGEMENT, MILWAUKEE, WISCONSIN:

“The weekly claims number was a surprise. We keep expecting to see this number get down to around 400,000 or so and it hasn’t happened yet.

“Overall I would say it’s not particularly good news for the economy and it’s not unreasonable that the Treasury market is getting a little lift out of it.

“The Empire data came in stronger than expected. Overall it looks like manufacturing continues to be a strong point of this recovery so far.”

JOSEPH TREVISANI, CHIEF CURRENCY ANALYST, FX SOLUTIONS, SADDLE RIVER, NEW JERSEY:

“It won’t have too much dollar impact but it calls into question any improvement in the unemployment rate. It is a serious consideration for further economic growth.”

MARKET REACTION: STOCKS: U.S. stock index futures add to losses after jobless claims data. BONDS: U.S. Treasury debt prices slightly extend gains. DOLLAR: U.S. dollar falls versus yen.

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Instant View: Jobless claims jump in latest week