Americans seeking unemployment benefits rose to an all-time high since February. This rise is attributed to the temporary shutdowns of automobile factories.
The New York Times reported that applicants for claims rose by 15,000 to a staggering 297,000 according to the Labor Department. It has been the highest weekly total since the 327,000 applications filed in the week of February 28.
While benefit applications are said to be a proxy for layoffs, it continues to remain even with a labor market announcing a rise in employment. The four-week average for claims rose to 279,000 from 275,000 in the previous week. For example, Michigan — home to many auto plants — made a huge leap as they typically shutdown in the summer.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said that the jobless claims data would be distorted for a few weeks. He also said that there is no reason at all to think that the underlying trend in claims has changed and once the shutdowns are over, we'd expect claims to revert to 280K or so.
As for continued claims, the Labor Department told CNBC that people receiving benefits totaled at 2.33 million for the week ending June 27, up from the past week but lower than last year at 9.9 percent.
While Greece is trying to deal with its debt crisis, the country is only 2 percent of the euro area's gross domestic product, and the Greek crisis will not create much effect so far according to IMF chief economist Olivier Blanchard, in an IMF forecast reported by Bloomberg.
IMF also added that the world economy will rise to 3.3 percent this year, less than the 3.5 percent pace forecast in April and sluggish than the 3.4 perecnt expansion in 2014.
American central bankers saw last June that the economy is heading for conditions that would require an increase in interest rates, but in the same breath they are worried that consumer spending is low — all of these while risks from China and Greece continue to intensify.
