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UPDATE 1-New US jobless claims rise, show soft labor market
October 22, 2009 / 1:02 PM / 8 years ago

UPDATE 1-New US jobless claims rise, show soft labor market

(Adds details, market reaction)

WASHINGTON, Oct 22 (Reuters) - The number of U.S. workers filing new claims for unemployment benefits rose more than expected last week, data showed on Thursday, indicating the labor market remains fragile despite signs of economic revival.

Initial claims for state jobless insurance increased 11,000 to a seasonally adjusted 531,000 in the week ended Oct. 17 from a revised 520,000 the prior week, the Labor Department said, after declining for two consecutive weeks.

Analysts polled by Reuters had forecast new claims nudging up to 515,000 last week from a previously reported 514,000.

U.S. stock index futures briefly trimmed gains on the report, while government bond prices held losses.

“There is a little bit of noise this time of year with seasonal adjustments,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida.

“The four-week average is still bouncing down but is still relatively high, which is consistent with a moderate economic recovery, but the job market is going to lag.”

While data strongly indicates the economy started growing again in the July-September period after four quarters of declining output, persistently high unemployment is raising questions about the durability of the recovery.

White House economic advisor Lawrence Summers told Reuters in an interview on Wednesday the economy was firmly set for a recovery, but cautioned that the growth pace might be moderate and the job market would not revive immediately. For details see [ID:nN21508789]

The recession that started at the end of 2007 is the worst since the Great Depression of the 1930s and has been characterized by massive job destruction. The unemployment rate rose to a 26-year high of 9.8 percent in September.

Still, the pace of job losses has moderated considerably from early this year. The four-week moving average for new claims fell by 750 to 532,250 last week, the lowest level since mid-January, the Labor Department said.

It was the seventh straight week of decline in the four-week moving average, which is considered a better gauge of underlying trends as it irons out week-to-week volatility.

There were more encouraging signs, with the number of people collecting long-term unemployment benefits dropping 98,000 to 5.92 million in the week ended Oct. 10, the latest week for which the data is available.

That was the lowest level since March and it was the first time that continuing claims fell below the 6 million mark since April.

This measure has trended lower for five straight weeks. Analysts view this steady decline as an indication that unemployment might be close to peaking, but it could be an indication that many jobless workers have exhausted their unemployment benefits.

The four-week moving average of continuing claims fell 59,250 to 6.03 million, the lowest reading since early April this year.

The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, edged down to 4.5 percent in the week ended Oct. 10 from 4.6 percent the prior week, the department said. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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