Rise in US jobless claims exposes labour market jitters

Job seekers wait in line to attend a career fair presented by National CareerFairs in San Jose, California. Photo / AP

WASHINGTON: The number of people filing new claims for unemployment benefits unexpectedly rose last week by the largest amount in three months. The surge is evidence of how volatile the job market remains, even as the economy grows.

Applications for unemployment benefits rose to 471,000 last week, up by 25,000 from the previous week, the Labour Department said yesterday. It was the first increase in five weeks and the biggest jump since a gain of 40,000 in February.

The total was the highest since new claims reached 480,000 on April 10. It also pushed the average for the last four weeks to 453,500.

"Although no one expects this volatile series to go in one direction every week, this is clearly a disappointment," said Jennifer Lee, senior economist at BMO Capital Markets.

Stocks slid at the opening bell as investors' already bleak view of the world economy worsened with another drop in the euro and the disappointing US employment news.

In a separate report, a private research group said its index of leading economic indicators dipped slightly last month. It was the first decline in more than a year.

Six of the 10 components on the Conference Board's index deteriorated. Among them: US residents filed fewer applications to build homes; vendors were slower in delivering supplies; the unemployed filed more claims for jobless aid; and consumers' confidence dropped.

Lawmakers responded yesterday to the persistently high jobless rate by announcing a deal to extend expanded unemployment benefits for the long-term unemployed until the end of the year.

Laid-off workers would also continue to get subsidies to buy health insurance through the Cobra programme. House leaders plan to vote on the bill today, with the Senate voting next week.

Employers are hiring again, but not at levels needed to make a dent in the unemployment rate, which increased in April to 9.9 per cent. An improving economy has lured those who had given up looking for work back into the labour market.

The jump in the unemployment rate came even though payrolls rose last month by 290,000 jobs, the biggest gain in four years.

Analysts could trim their forecasts for job growth this month based on the sudden rise in new claims. The increase occurred in the week that the Government conducts its survey for the monthly unemployment report.

The number of people receiving jobless benefits fell by 40,000 to 4.63 million for the week ending May 8.

However, that figure does not include unemployed workers who have exhausted their regular 26 weeks of benefits. An additional 5.3 million workers are receiving extended benefits paid for by the federal Government for the week ending May 1.

- AAP