Unemployment Claims Hit Two-Month High
Claims for unemployment benefits jumped to their highest level since late January last week, a sign that labor market growth is weakening. Weekly unemployment benefit applications rose 13,000 to a seasonally adjusted 380,000, while the previous week’s figure was revised upward by 10,000 from 357,000 to 367,000, the Labor Department said Thursday.
The four-week average, a less volatile measure than the weekly figure, was 368,500, an increase of 4,250 from the previous week’s revised average of 364,250.
The news follows a disappointing monthly report on jobs released on Friday. That report showed the economy added 120,000 jobs in March, down from an average of more than 200,000 from December through February.
Meanwhile, the unemployment rate fell to 8.2 percent in March, but mostly because potential workers gave up their search for jobs.
The jump in weekly claims will add to worries that the stronger growth at the beginning of the year was a mirage similar to the growth seen a year ago. After strong growth in the first few months of 2011, job growth slowed throughout the summer, stunting any momentum the economy might have been giving President Obama last year.
The economy is expected to be the major determining factor in this year’s presidential election, and presumptive GOP presidential nominee Mitt Romney used last week’s jobs report to hammer Obama for his performance on the economy.
The weekly report released Thursday shows unemployment claims are hovering around levels that represent growth and are well below the 416,000 claims during the same period last year.
Economists say that when claims drop consistently below 375,000, job creation is hitting a fast enough pace to lower the unemployment rate.
The increase in job applications underscores Federal Reserve Chairman Ben Bernanke’s concerns that the labor market was growing too fast compared with the nation’s economic expansion.
He has said that demand needs to pick up pace and businesses need to spend more to fuel a faster rate of growth.
The economy grew at an annual rate of 3 percent in the final three months of last year, which was up from 1.8 percent in the third quarter.
Estimates for January-March period this year are running about 2.5 percent.
Some economists downplayed the March figures, saying businesses picked up hiring earlier in the year because of a warm winter and that last month could reflect a temporary drop in jobs, while highlighting that the overall numbers are lower than last year.
The Fed said Wednesday that economy is expanding at a moderate pace, but many areas of the country are feeling the pinch of higher gas prices, according to its Beige Book.
Economic activity was up in five of the 12 Federal Reserve districts, but some business contacts told the central bank that rising gas prices could cut into consumer spending in the coming months.
The Fed reported that hiring was steady or picking up slightly in several areas across the country, as businesses continue searching for highly skilled workers for certain positions.