On the surface, the jump in weekly unemployment claims to a 14-month high of 294,000 looks alarming, particularly after April's surprise slowdown in hiring.
But some economists aren't worried yet, since they can explain away a sharp 20,000 increase with one event — spring break for New York City schools.
"The story is that non-teacher school employees (bus drivers, cafeteria workers, etc.) are somehow permitted to file for unemployment when schools are closed for a week or two (your tax dollars at work). Since the timing of the breaks swings around from year to year, the seasonal adjustment process is unable to properly take this special factor into account," wrote Stephen Stanley, chief economist at Amherst Pierpont Securities.
"In any case, of the 18K increase in initial claims nationally on a not seasonally adjusted basis in the latest week, ... almost 15K comes from New York, close to doubling the number of new filers in the Empire State from one week to the next," he wrote.
Stanley also said striking Verizon workers could be a factor, but he believes the school impact is bigger, since most Verizon workers, on strike since April 14, should not yet be filing claims. Verizon workers in New York can file for unemployment, but they cannot collect until June, he noted.
"I would bet my lunch that they will slide back to "normal" next week," Stanley wrote.
Thursday's claims report, however, does cause some concern when considered against a trend of rising filings over the past three weeks. For the week of April 16, claims were 258,000 and the four-week trend was 256,000. The four-week trend is now 268,000, still a relatively low level. Claims had been at a 42-year low in April.
"The claims data had been looking very favorable in the middle of April, but have increased significantly over the most recent three weeks. And this does suggest that the labor market has deteriorated lately," wrote JPMorgan economist Daniel Silver.
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Silver also cited New York City's school break for the increase. He said the data service Haver Analytics shows there was a surge of 23,000 claims filed in New York in the week of May 7, very close to the spring break period for New York City's public schools. He said there have often been large increases in claims around the city's spring break and they quickly reverse.
"We're always a little wary to take too much from a single week of data," he said in a phone interview. He added the data can be choppy and influenced at this time of year by Easter, Passover and school holidays. It also does not indicate a change to a weaker trend in employment, he said.
The weekly claims data follow April's jobs report, which showed just 160,000 nonfarm payrolls were added last month. Economists had expected more than 200,000. So far, the labor market has been a relative bright spot, outshining the slow growing economy.