New applications for unemployment benefits in the U.S. unexpectedly rose last week to the highest level in three months, a sign progress in the labor market may be stalling.
Jobless claims increased by 25,000 to 429,000 in the week ended April 23, the most since late January, Labor Department figures showed today in Washington. The government anticipates a drop in unadjusted applications during the Good Friday holiday week, something that didn’t happen this year, a Labor Department spokesman said.
The report also showed the number of people on unemployment benefit rolls and those receiving extended payments dropped, a sign the jobless rate may fall in coming months. Companies have been cautious about ramping up hiring until they see further signs the recovery is self-sustaining, one reason why Federal Reserve policy makers yesterday pledged to complete their asset-purchase plan by June and keep borrowing costs near zero.
“It’s clearly disappointing,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “It may be that the pace of improvement is slowing.”
The economy grew at a 1.8 percent annual rate in the first three months of the year, down from a 3.1 percent pace in the fourth quarter, as government spending dropped by the most in 28 years, a report from the Commerce Department also showed today.
Stock-index futures dropped after the reports and Treasury securities rose. The contract on the Standard & Poor’s 500 Index fell 0.2 percent to 1,349 at 8:56 a.m. in New York. The yield on the benchmark 10-year Treasury note, which moves inversely to prices, fell to 3.32 percent from 3.36 percent late yesterday.
Economists projected claims would decline to 395,000 from the 403,000 initially reported for the prior week, according to the median estimate of 38 economists surveyed by Bloomberg News. Estimates ranged from 375,000 to 410,000. The government revised the prior week up to 404,000.
The holiday-shortened week usually causes unadjusted claims to fall by about 18,500, a Labor Department spokesman said as the data was released to the press. Instead, they rose by about 3,500, he said.
The temporary auto-plant shutdowns caused by the disaster in Japan have led to some increase in claims, the spokesman said. Nonetheless, the closures are not having “a huge effect,” he said.
The four-week moving average, a less volatile measure than the weekly figures, rose to 408,500 last week from 399,250 the prior week.
The number of people continuing to receive jobless benefits dropped by 68,000 in the week ended April 16 to 3.64 million, the fewest since September 2008.
The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 76,400 to 4.165 million in the week ended April 9.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 2.9 percent from 3 percent the prior week, today’s report showed.
Forty-three states and territories reported a decrease in claims, while 10 reported an increase. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
The economy added 196,000 jobs in April and the jobless rate held at 8.8 percent, economists surveyed by Bloomberg forecast the Labor Department will report on May 6.
The economy added 216,000 jobs in March, the most since May 2010, Labor Department figures showed April 1.
“The economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually,” Fed policy makers said yesterday after their policy meeting.
The jobless rate will still be 8.5 percent in the fourth quarter, according to the median forecast of economists in a separate Bloomberg survey this month.
Bank of America Corp., the largest U.S. lender by assets, has been cutting jobs in the mortgage-origination business as demand falls for home loans.
“We have been reducing head count by approximately 3,500 people,” Chief Executive Officer Brian T. Moynihan said April 15 in a conference call with analysts and investors in the Charlotte, North Carolina-based bank. “About 2,000 of those are contractors in that business and about 1,500 are teammates.”
Some companies are turning more optimistic about hiring. Oak Brook, Illinois-based McDonald’s Corp., the world’s largest restaurant chain by revenue, sought as many as 50,000 workers in the U.S. during its National Hiring Day event on April 19.
“We do and have continued to hire through some of the economic downturns, Donald Thompson, chief operating officer at McDonald’s, said on an April 21 conference call. “We also thought it would be a more unified way to get the message out that McDonald’s is hiring.”