July 19 (Bloomberg) -- More Americans than forecast filed first-time claims for unemployment insurance payments last week as the volatility induced by the annual auto-plant retooling period started to wear off.
Applications for jobless benefits increased by 34,000 to 386,000 in the week ended July 14, Labor Department figures showed today. Economists forecast 365,000 claims, according to the median estimate in a Bloomberg News survey. The volatility in the numbers was due to a change in the timing of annual automobile plant layoffs, a Labor Department spokesman said as the data were released.
Determining whether the labor market is improving or deteriorating has been more difficult in recent weeks because a reduction in the number of auto-plant layoffs typical at this point of the year has thrown the Labor Department’s seasonal adjustment process out of line. It may take weeks to judge judge the direction the labor market is taking.
“Seeing through the statistical noise, the labor market is pretty soggy, and the claims numbers will reflect that once they settle down,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York and the best forecaster of U.S. economic indicators in the two years through May, according to Bloomberg data. “I don’t think next week is going to be a clean read either, so you might have to wait a little while longer.”
Stock futures climbed after the report. The contract on the Standard & Poor’s 500 Index maturing in September rose 0.3 percent to 1,372 at 8:39 a.m. in New York. The yield on the 10- year Treasury note rose to 1.51 percent from 1.5 percent late yesterday.
Estimates for first-time claims ranged from 350,000 to 390,000 in the Bloomberg News survey of 47 economists. The Labor Department initially reported the prior week’s applications at 350,000.
The timing of auto plant shutdowns to retool for the new model year has been difficult to predict this year, making adjusting the claims data for these seasonal variations more challenging, the Labor Department spokesman said. The spokesman said the adjustment process expected a decrease of about 7 percent in unadjusted claims. Instead claims rose about 2 percent. The spokesman said it will take a couple of weeks for the volatility to ease.
Chrysler Group LLC said in May that three U.S. plants would skip normally their scheduled two-week midyear shutdowns to meet increased demand, while two more plants would shut for one week instead of two. Ford Motor Co. said it would idle 13 plants for one week instead of two as part of the company’s annual summer shutdown. Nissan Motor Co. is also boosting hours, shifts and payrolls to meet demand.
Last week included the 12th of the month, which coincides with the period the Labor Department uses in its survey of employers to calculate monthly payroll growth. The employment report for July will be released on August 3.
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