January 31, 2008 / 1:40 PM / 11 years ago

Weekly jobless claims surge

WASHINGTON (Reuters) - The number of workers filing new claims for jobless aid jumped by a much larger-than-expected 69,000 last week to the highest in over two years, government data on Thursday showed, but the numbers were likely skewed by the timing of a public holiday.

Visitors search for job possibilities on the Internet at Workforce Central Florida in Casselberry, Florida July 3, 2003. REUTERS/Joe Skipper

The Labor Department said initial claims for state insurance benefit were 375,000 in the week ending January 26, the highest since October 2005, when claims reached 376,000 in the wake of Hurricane Katrina.

A Labor Department official said it was also the largest weekly increase since September 2005, when claims had mounted by 95,000.

Economists surveyed by Reuters had forecast 315,000 claims last week following an upwardly revised 306,000 the week before, previously reported at 301,000 claims.

U.S. stock index futures and the dollar fell after jobless claims, while bond prices rallied on the prospect of another cut in interest rates by the Federal Reserve.

The Labor Department official said the timing of last week’s Martin Luther King, Jr. holiday may have been a factor.

“Holiday effects are very hard to pick up ahead of time ... it is very hard to accurately predict ahead of time what the impact on claims will be,” the Labor official said.

The four-week average of weekly claims, which helps smooth out fluctuations to expose the underlying jobs trend increased to 325,750 last week from 315,500 the week before.

“The four-week moving average is a better indicator, but still there’s headline shock in a number like 375 (thousand),” said Michael Darda, chief economist at MKM Partners LLC in Greenwich, Connecticut.

“If claims were to stay at that level it would indicate signs of softening in the labor market. A few weeks ago the claims had risen to 350-plus and pulled back nicely. Taken together it’s not necessarily a disaster,” Darda said.

The number of so-called continuing claims rose by 47,000 to 2.72 million in the week ended Jan 19, the latest period for which figures were available. The continuing claims total compared with economists’ forecasts for 2.68 million claims.

Reporting by Alister Bull; editing by Neil Stempleman

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