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(CEP News) - Initial unemployment claims in the U.S. are expected to remain above the 500k level in the week ending Nov. 15, after crossing the half-a-million threshold for the first time in over seven years last week. The report could get extra attention because this week is the survey week for November nonfarm payrolls.
The Nov. 8 report showed 516k people filed new claims for unemployment benefits, a figure far above the market expectation of 480k claims. The release dwarfed the previous high of 499k, and there were no "special factors" such as hurricanes that put an upward bias in the figure. This week, economists expect the figure to come down only slightly. The consensus looks for an 11k drop to 505k initial claims, a figure well above the four-week average of 491k. Estimates range from 490k to 550k. Joseph LaVorgna, chief U.S. economist at Deutsche Bank, looks for 520k new claims. He said such a figure would be consistent with his forecast for 325k net job losses in the nonfarm payrolls report, the largest decline since September 2001. Economists from Barclays expect to see 515k claims. "This will bring the four-week moving average to 500k, the highest since March 1991," they noted. To put that into context, a figure above 400k is usually considered recessionary, which suggests the current figures are consistent with a protracted slowdown. Continuing claims, which represent the current number of individuals who are unemployed and receiving benefits, are at their highest level since 1983. In this report for the week ending Nov. 8, economists expect the figure to move up even higher by 13k to 3.900 million. This will mark the 28th straight week that continuing claims have been above 3 million, suggesting that the labour market has weakened on both fronts, as people who have lost their jobs are finding it difficult to find new employment. "The sharp increase in claims is suggestive of further deterioration in the labor market, consistent with our forecast for job cuts to accelerate," the Barclays team said. Last week's four-week average for continuing claims set a new cyclical high at 3.794 million. New regulations introduced on June 30 extended benefits and made it easier to file a claim, which put an upward bias of unknown quantity into the recent data. But economists say the spike in claims from the new regulations should have ended several weeks ago. By Patrick McGee,
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