Instant View: Jobless claims rise more than forecast

NEW YORK (BestGrowthStock) – The number of U.S. workers filing new applications for jobless benefits unexpectedly rose last week, according to a government report on Thursday that pointed to a labor market still under stress even as the economy grows.

KEY POINTS: * Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 480,000 in the week ended January 30, the Labor Department said. * Analysts polled by Reuters had forecast claims falling to 460,000 from a previously reported 470,000. * A Labor Department official described the report as “straight forward.” Delays in processing applications due to short staffing at some state employment offices over the holidays resulted in a backlog that distorted claims data over the past weeks.

COMMENTS:

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK:

“The claims numbers won’t change people’s views about tomorrow’s payrolls numbers where people are looking for something close to unchanged. But they do show that no momentum is building in February. February looks much worse than the last couple of months.

“Productivity was quite strong with an annualize rise of 6.2 percent in the fourth quarter, implying a 4.4 percent drop in unit labor costs.”

STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO., GREENWICH,

CONNECTICUT:

“They (weekly jobless claims) continue to weaken on continuous basis in the short term … now we’re having weeks of the data edging higher. It’s a bit of a disappointment.

“It may weigh going into the (non-farm payroll) data coming out tomorrow.”

JAMES DEMASI, CHIEF FIXED-INCOME STRATEGIST, STIFEL NICOLAUS &

CO. INC., BALTIMORE:

“It definitely gives more fuel to the rally. Over the course of the week, people had built in enough concession for next week’s auction in Treasuries. This gives them a reason to jump back in.

“That’s providing a pretty good bid across the Treasuries market. It’s very difficult to drive wages upward when you have 10 percent unemployment.”

SCOTT BROWN, CHIEF ECONOMIST, RAYMOND JAMES & ASSOCIATES, ST.

PETERSBURG, FLORIDA:

“It’s disappointing at this point. We had seen a downtrend in claims since the fourth quarter and that downtrend looks like it’s stalled out here.

“Treasuries added a little bit to gains. The bond market is looking at the stock market on a day-to-day basis.”

SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR &

ASSOCIATES, TORONTO:

“The big news in recent jobless data was claims moving below 500,000, though the numbers remain sticky. That suggests that any improvement in employment will be slow. I think that’s the reason the markets haven’t been moving higher even though most earnings reports have been better than expected. The markets sense that the recovery will remain slow.

“This number should dominate trading today, but same-store sales will also have an impact as traders look to see whether consumers are starting to spend more.”

MARKET REACTION: STOCKS: U.S. stock index futures extend declines BONDS: U.S. Treasury debt prices added to gains DOLLAR: U.S. dollar falls to session lows versus yen

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Instant View: Jobless claims rise more than forecast