Ahead of this coming Friday’s national unemployment report from the U.S. Labor Department, it was reported late last week that a 15-day strike at Verizon Communications fueled a surge in new jobless benefit claims last week, but the job market still looks weak after stripping out those effects.
Initial jobless claims rose by 5,000 to a seasonally adjusted 417,000 in the week ended Aug. 20, the Labor Department said Thursday. Claims filed in the previous week were revised up to 412,000 from 408,000.
Separately, an index of regional manufacturing activity by the Federal Reserve Bank of Kansas City remained flat in August despite signs of a downturn elsewhere in the U.S. The index remained at three for the month, unchanged from July, as the relatively healthy farm and energy sectors helped the region. Figures above zero indicate expansion.
Other regional manufacturing surveys suggest a slowdown in the overall economy, though jobless claims and other key indicators aren’t showing substantial deterioration yet.
The Labor Department said the Verizon strike added at least 8,500 new jobless claims last week and another 12,500 claims in the week ending Aug. 13. “Those claims have inflated the national total,” a Labor economist said.
Workers at Verizon, who weren’t paid by the company during the walkout, began returning to work Monday evening. Verizon’s unions had called the strike, involving 45,000 workers, to protest concessions the company is seeking on pensions, health care and job security. After the strike figures are stripped out, Thursday’s report paints a mixed picture of the overall market.
“The labor market may be improving but the rate of improvement is very sluggish with layoffs remaining fairly elevated,” said Steven Wood, chief economist at Insight Economics LLC.
The four-week moving average of new claims, which smooths out often-volatile weekly data, increased 4,000 to 407,500, the Labor Department said. Economists generally say the labor market is improving significantly when claims drop below 400,000, a level breached only once since April.
“We are concerned about the potential for weakening in job growth in coming months in response to recent plunging sentiment in response to market and political turmoil, but we aren’t seeing it yet in the latest claims results,” said Morgan Stanley economist Ted Wieseman.
Thursday’s report showed the number of continuing unemployment benefit claims—those drawn by workers for more than a week—fell by 80,000 to 3,641,000 in the week ended Aug. 13. Continuing claims are reported with a one-week lag. 08-29-2011. HRM Partners.