The AP gets to use its favorite adverb again, and this time it’s even more ridiculous when reading the spin on the latest unemployment news. Initial jobless claims rose again last week, and as the AP explains, it probably comes in part with the massive snowstorm that blanketed the mid-Atlantic region. But if that’s the case, then why would they describe it with the word “unexpectedly” (via HA reader DogSoldier and JWF) ?
The number of new claims for unemployment benefits jumped unexpectedly last week as heavy snows caused layoffs to rise.
In addition, many state agencies in the mid-Atlantic and New England regions that process the claims were closed due to the storms and are now clearing out backlogs, a Labor Department analyst said.
The department said Thursday that first-time claims for unemployment insurance rose by 22,000 to a seasonally adjusted 496,000. Wall Street analysts polled by Thomson Reuters expected a drop to 455,000.
Bad weather can cause job losses in construction and other industries sensitive to weather.
That much is true. Construction workers laid off from stalled projects can claim unemployment until the employer and/or customer is ready to resume. Since that’s the case, one might have expected the number of jobless claims to increase, especially considering the severity of the storm and the inability of cities to clear the streets. Washington DC had to shut down for most of a week because of the weather.
So why didn’t the geniuses that the media love to quote “expect” this?
Stocks opened sharply lower Thursday after the government said weekly jobless claims ramped up more than expected last week.
The Dow was down more than 150 points at the open. All 30 components were lower, led by Coca-Cola [KO 53.21 -1.95 (-3.54%) ], Caterpillar [CAT 55.16 -1.80 (-3.16%) ] and American Express [AXP 37.46 -0.95 (-2.47%) ].
The Labor Department reported that the number of workers filing jobless claims jumped to 496,000, well ahead of estimates of 455,000. Though the government said some of the increase could have been due to a backlog of claims processing due to inclement East Coast weather, the trend was enough to rattle markets.
The problem with the snow explanation is that this is not just a one-week anomaly. The four-week average of initial jobless claims has risen by 30,000 over the last month, a trend that indicates that more businesses have continued cutbacks. On Tuesday, the Bureau of Labor Statistics announced a sudden and significant increase in mass layoff events for January:
Employers took 1,761 mass layoff actions in January that resulted in the separation of 182,261 workers, seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month, the U.S. Bureau of Labor Statistics reported today. Each action involved at least 50 persons from a single employer. Both mass layoff events and initial claims increased from the prior month after four consecutive over-the-month decreases. In January, 486 mass layoff events were reported in the manufacturing sector, seasonally adjusted, resulting in 62,556 initial claims. Both figures increased over the month–the first increases since August 2009 for events and since September 2009 for initial claims. (See table 1.)
That doesn’t come from heavy snowfalls, but from a persistently negative outlook on economic growth. Businesses are still paring back their staffs and reluctant to commit cash to payroll, nor capital to expansion. The market is recognizing that today.