Jobless claims at four-month high, cast shadow over jobs market

WASHINGTON Thu Apr 4, 2013 4:31pm EDT

People wait in line to meet a job recruiter at the UJA-Federation Connect to Care job fair in New York in this March 6, 2013 file photo. REUTERS/Shannon Stapleton/Files

People wait in line to meet a job recruiter at the UJA-Federation Connect to Care job fair in New York in this March 6, 2013 file photo.

Credit: Reuters/Shannon Stapleton/Files

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WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits hit a four-month high last week, the latest suggestion the labor market recovery lost some momentum in March.

Initial claims for state unemployment benefits increased 28,000 to a seasonally adjusted 385,000, the highest level since November, the Labor Department said on Thursday.

Economists, who had expected claims to drop to 350,000, said while part of the rise reflected difficulties adjusting the data during the Easter and spring breaks, there was no doubt the pace of job growth had eased.

"What we do know is that the growth momentum has slowed, employment has slowed. The question is how much?" said Millan Mulraine, a senior economist at TD Securities in New York.

That question will be answered on Friday when the government releases its closely monitored employment report for March.

According to a Reuters survey of economists, employers likely added 200,000 jobs to their payrolls last month after hiring 236,000 workers in February. The unemployment rate is seen steady at a four-year low of 7.7 percent.

However, the risks for a weaker reading are high after a report on Wednesday showed private employers added the fewest jobs in five months in March.

Goldman Sachs expects the economy to have created 175,000 jobs last month, noting that the tone of labor market indicators softened in March.

"The sequester is likely to slow March payroll growth and payrolls have outpaced broader measures of labor market improvement over the last few months," said Sven Jari Stehn, an economist at Goldman Sachs in New York.

The so-called sequester refers to the $85 billion in across the board government spending cuts that took hold on March 1.

Last week, the four-week moving average for new claims, a better measure of labor market trends, rose 11,250 to 354,250.

A Labor Department analyst said claims for California, the most populous U.S. state, had been estimated.

The claims data capped gains on Wall Street, where investor sentiment was buoyed by aggressive monetary stimulus by the Bank of Japan. The Japanese central bank promised to inject about $1.4 trillion into the economy in less than two years.

The dollar recorded its biggest daily percentage gain versus the yen since late 2008, while U.S. government bond prices rallied.


The labor market is key to the Federal Reserve's monetary policy. This month the central bank said it would maintain its monthly $85 billion purchases of mortgage and Treasury bonds to keep rates low and foster faster job growth.

On Thursday, Federal Reserve Bank of Chicago President Charles Evans said the Fed could keep interest rates near zero to drive down unemployment as long as inflation remained lower than desired in the future.

But Esther George, his counterpart at the Kansas City Fed, said the current policies were "overly accommodative."

The ultra-easy policy stance should offset some of the drag on the economy from belt-tightening in Washington. Data this week suggested the government budget cuts took some edge off the economy as the first quarter ended.

Factory activity grew at its slowest pace in three months in March. Growth in the vast services sector was the weakest in seven months.

First-quarter GDP growth estimates currently range as high as a 3.8 percent annual rate. The economy grew at a 0.4 percent pace in the last three months of 2012.

"There is evidence that the economy is going to slow in the second quarter again this year as the European economy is weak and the mandatory spending cuts from Washington start to have a greater impact," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.

Despite signs of weakening in labor market conditions, the pace of layoffs remains contained. Planned layoffs at U.S. firms fell 11 percent in March, consultants Challenger, Gray & Christmas said in a separate report.

The claims report also showed the number of people still receiving benefits under regular state programs after an initial week of aid dropped 8,000 to 3.06 million in the week ended March 23.

(Editing by Andrea Ricci)

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Comments (34)
Harry079 wrote:
“It was the third straight week of gains in claims.”

Not good. Not good at all.

The Fed has no more fairy dust in its bag of tricks.

Apr 04, 2013 8:45am EDT  --  Report as abuse
AdamSmith wrote:
Unemployment in America is being greatly exacerbated by immigration on a gigantic scale.

The advocates of immigration conveniently ignore the economic principle of supply and demand, which nature imposes.

Introducing more workers into any market increases the supply and thus drives down the wage rates.

It applies to any resource. If more medical doctors are introduced into a city, the existing medical doctors will find they have fewer patients, and their incomes will go down.

The same applies to agricultural workers. If a county imports foreign laborers, the existing local laborers will find their wages going down quickly.

Who benefits from immigration? The employers benefit and the immigrants benefit.

Who is hurt by immigration? The American laborer is directly harmed, and his family, home and occupation are, more often than not, destroyed forever.

Who can blame the American worker, whose career is destroyed, for speaking out against immigration? Or even for hating the American government, and immigration advocates, for such a brutal betrayal?

Apr 04, 2013 9:17am EDT  --  Report as abuse
Margaretville wrote:
And the Obama bunch will have a festive concert at the White House. Does this evoke the image of Nero fiddling while Rome burned?

Apr 04, 2013 9:19am EDT  --  Report as abuse
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