April 4, 2013 / 1:10 PM / 5 years ago

WRAPUP 3-U.S. jobless claims at four-month high, cast shadow over jobs market

* Weekly jobless claims rise 28,000
    * Four-week moving average increases 11,250
    * Report hints at some softening in labor market conditions

    By Lucia Mutikani
    WASHINGTON, April 4 (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

    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.
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