U.S. jobless claims hit 14-month high; analysts blame Verizon strike

Thu May 12, 2016 12:32pm EDT
 
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By Lucia Mutikani

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits rose last week to a more than one-year high, but economists blamed striking telecommunications workers for the surge and said the data did not signal a deterioration in the overall labor market.

Another report on Thursday showed import prices increased in April for a second straight month, suggesting the disinflationary impulse from a strong dollar and lower oil prices, which has helped to hold inflation well below the Federal Reserve's 2 percent target, was fading.

Initial claims for state unemployment benefits increased 20,000 to a seasonally adjusted 294,000 for the week ended May 7, the highest level since late February 2015, the Labor Department said. It was the third consecutive week of increases in first-time applications for jobless benefits.

"We have to look past the noise in the latest jobless claims number because it was likely influenced by the Verizon strike. The broader underlying trend in claims remains very constructive," said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.

RBC Capital Markets said first-time applications for jobless benefits would have fallen last week excluding the impact of the strike. About 40,000 Verizon VZ.N workers walked off the job in mid-April.

Other economists blamed the spike in claims on difficulties adjusting the data due to seasonal variations and other factors.

Unadjusted jobless claims last week surged in New York state and Pennsylvania, which economists tied to the Verizon dispute. Unadjusted claims increased in Michigan.

"New York state provides unemployment insurance benefits for striking workers when an employer hires permanent replacement workers," said Jesse Hurwitz, an economist at Barclays in New York. "Verizon reportedly increased the ranks of replacement workers in the past two weeks, which we believe made striking workers eligible."   Continued...

 
Job seekers wait to talk to a recruiter  at a health care job fair sponsored by the Colorado Hospital Association in Denver, U.S., May 9, 2016.  REUTERS/Rick Wilking