Jobless Claims Up Due to Automakers? Feds Consider New Strategy
Jobless claims are on the rise again, despite an earlier July report which estimated a low amount of claims, prompting some to believe that the job market was headed for improvement.
The economy may not be getting any better anytime soon, according to the latest report which has stated that jobless claims are continuing to rise despite a report earlier this month that indicated otherwise.
An additional 34,000 people filed for first time unemployment benefits in the second week of June, up from the week before, according to the Bureau of Labor Statistics.
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The claims are considered a way to gauge the health of the job market, but early July reports may have given a falsely optimistic view. The inaccurate outlook is likely due to the Labor Department's attempts to adjust for the number of temporary layoffs that occur in early July due to automakers who take that time for maintenance of equipment.
"It is not unusual to witness extreme moves around the July 4th holiday, because the timing of retooling-related shutdowns in the auto sector are notoriously difficult to account for -- and this appears to be the case over the past few weeks," Joseph LaVorgna, chief U.S. economist for Deutsche Bank, said in a note to clients, according to CNN Money.
Due to the inconsistency of the numbers, the Feds may have to alter the data in order to properly analyze the job market.
"The decision on the part of the Fed (whether) to act in two weeks comes down to their view of the labor market and unfortunately the claims data in July is not giving a seasonally adjusted clean report," Peter Boockvar, Equity Strategist at Miller Tabak & Co told Reuters.
"What the Fed may do is take out the states of Michigan and those in the South whose claims figures are being influenced by the auto plants in order to get a better measure of the jobs picture. Not that the Fed is going to make a decision on a few weeks of jobless claims but in the context of the current debate, every jobs data point counts all that more."
