New Jobless Claims Rise Unexpectedly to 558,000
Despite the increase in new claims, they remain below peak levels above 600,000 where they were stuck for most of this year. Economists see the decline as a sign layoffs have eased in recent months.
The Labor Department says initial claims increased to a seasonally adjusted 558,000, from 554,000 the previous week. Analysts expected new claims to drop to 545,000, according to Thomson Reuters.
The number of people remaining on the benefit rolls, meanwhile, fell to 6.2 million from 6.34 million the previous week. Analysts had expected a smaller decline. The continuing claims data lags initial claims by one week.
The four-week average of initial claims, which smooths out fluctuations, rose by 8,500 to 565,000. That reverses six straight weeks of decline.
Initial claims reflect the pace of layoffs by employers. The department last week said companies cut 247,000 jobs in July, a large amount but still the smallest number in almost a year.
The unemployment rate dipped to 9.4 percent in July from 9.5 percent, its first drop in 15 months.
There were 617,000 new jobless claims in late June, before the figures were distorted last month by a shift in the timing of temporary auto plant shutdowns. That shift caused claims to drop sharply and then jump up last month.
Claims fell steeply last week, however, when the data were no longer affected by the distortions.
Still, initial claims remain far above the roughly 325,000 that economists say is consistent with a healthy economy. New claims last fell below 300,000 in early 2007.
Including federal emergency benefit programs, 9.25 million people received unemployment compensation in the week ending July 25, the latest data available. That's down from a record total of 9.35 million the previous week. Congress has added up to 53 extra weeks of benefits on top of the 26 typically provided by the states.
Among the states, Alabama had the largest increase in claims, with 721. The next largest increases were in Washington, Nebraska, Kentucky and Delaware. The state data lag initial claims by one week.
California reported the largest drop in claims, of 7,258, which it attributed to fewer layoffs in the service industry. Michigan, Tennessee, Florida and Georgia had the next largest decreases.