The U.S. Labor Department is out with its report on weekly jobless claims, and the report showed a serious surge in new jobless claims. It also reverses a series of positive reports up to this time. Claims rose by a sharp 68,000 to 368,000, and the prior week’s initial report of 298,000 was revised higher to 300,000.
Dow Jones was calling for a reading of 328,000 and Bloomberg was calling for a reading of 325,000 in the last week. The reason we think this report matters so much is that it covered the week after Thanksgiving, which implies that more businesses might have decided to lay off workers going into year-end, rather than hiring more. The move is also after the prior week’s report of 298,000 before revisions was the second best since the recovery began in 2009.
The four-week average rose to 328,750 in the last week. Continuing jobless claims, what we refer to as the army of the unemployed (with a one-week lag in reporting), rose by 40,000 to 2,791,000.
Maybe this is another instance where bad news is good news. Worse jobs but still incremental gains implies that the $85 billion in monthly bond buying under quantitative easing can continue that much longer.