More Americans than forecast filed first-time claims for unemployment insurance payments last week as the volatility induced by the annual auto-plant retooling period wore off. Applications for jobless benefits increased by 34,000 to 386,000 in the week ended July 14, Labor Department figures showed today. Economists forecast 365,000 claims, according to the median estimate in a Bloomberg News survey. The volatility in the numbers was due to a change in the timing of annual automobile plant layoffs, a Labor Department spokesman said as the data were released. Determining whether the labor market is improving or deteriorating has been more difficult in recent weeks because a reduction in the number of auto-plant layoffs typical at this point of the year has thrown the Labor Department’s seasonal adjustment process out of line. It may take weeks to judge whether the labor market is making substantial progress. “We have to ignore claims for a few weeks because it’s just too hard to get a true signal from the numbers,� Daniel Silver, an economist at JPMorgan Chase & Co. in New York, said before the report. “Even just a small mistake in the seasonal factors can generate big changes.� Bloomberg Survey Estimates for first-time claims ranged from 350,000 to 390,000 in the Bloomberg News survey of 47 economists. The Labor Department initially reported the prior week’s applications at 350,000. The timing of auto plant shutdowns to retool for the new model year has been difficult to predict this year, making adjusting the claims data for these seasonal variations more challenging, the Labor Department spokesman said as the figures were released. The spokesman said the adjustment process expected a decrease of about 7 percent in unadjusted claims. Instead claims rose about 2 percent. The spokesman said it will take a couple of weeks for the volatility to ease. Chrysler Group LLC said in May that three U.S. plants would skip normally their scheduled two-week midyear shutdowns to meet increased demand, while two more plants would shut for one week instead of two. Ford Motor Co. (F) said it would idle 13 plants for one week instead of two as part of the company’s annual summer shutdown. Nissan Motor Co. is also boosting hours, shifts and payrolls to meet demand. Last week included the 12th of the month, which coincides with the period the Labor Department uses in its survey of employers to calculate monthly payroll growth. The employment report for July will be released on August 3. Moving Average The four-week moving average, a less-volatile measure, fell to 375,500 from 377,000. The number of people continuing to collect jobless benefits increased by 1,000 in the week ended July 7 to 3.31 million. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 85,000 to about 2.57 million in the week ended June 30. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 2.6 percent in the week ended, today’s report showed. Forty-four states and territories reported an increase in claims, while nine reported a decrease. Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates. Apart from the volatility in claims, other indicators show that job prospects have narrowed in the U.S. The Labor Department reported on July 6 that employers added 80,000 jobs to payrolls in June, fewer than economists forecast, while the jobless rate was unchanged at 8.2 percent, the 41st consecutive month above 8 percent. Federal Reserve Chairman Ben S. Bernanke told Senate lawmakers earlier this week that progress in reducing unemployment is likely to be “frustratingly slow� and repeated that the central bank is ready to take further action to boost the recovery, while refraining from pledging any new policies. To contact the reporter on this story: Alexander Kowalski in Washington at akowalski13@bloomberg.net To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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