WASHINGTON - The number of people seeking U.S. unemployment benefits rose 16,000 last week to a seasonally adjusted 326,000. Despite the increase, the number remains close to prerecession levels and points to stable hiring.
The Labor Department said Thursday that the four-week average of applications, a less volatile measure, inched up 250 to 319,500.
Applications are a proxy for layoffs. They have fallen back to roughly pre-recession levels, an indication that companies are letting go of fewer workers and expect solid economic growth in the months ahead.
“Layoffs are still very, very low,” said Ryan Sweet, senior economist at Moody’s Analytics Inc. in West Chester, Pa. “Claims are pointing toward an improvement in the job market. It’s evidence that the economy’s struggles this year were temporary.”
The low level of applications for benefits has boosted optimism about how many jobs employers added in March. Weekly claims for unemployment aid have reached a level that is typically consistent with monthly job gains of more than 200,000.
The Labor Department releases its March employment report today. Economists project that employers added 191,000 workers last month, according to a survey by FactSet.
That would be an improvement from February, when employers added 175,000 positions. And hiring in February accelerated after winter weather slowed job growth in the previous two months. Snowstorms and freezing temperatures in January and December shut down factories, kept shoppers away from stores and reduced homebuying. That cut into growth and hiring. Employers added 129,000 jobs in January and only 84,000 in December.
The unemployment rate rose to 6.7 percent in February. But the tenth of a percentage point increase happened, in part, for a positive reason: More people started looking for work. Employers didn’t immediately hire most of them, causing the unemployment rate to increase. But the fact that they started job hunting suggests that Americans are growing more optimistic.
More jobs and higher incomes will be needed to spur better overall economic growth. For now, economists estimate that the bad weather contributed to weak growth of 1.5 percent to 2 percent at an annual rate in the January-March quarter. But as the weather improves, most analysts expect growth to rebound to near 3 percent.
Forty-two states and territories reported a decrease in unemployment claims, while 11 reported an increase in the week ended March 22.
A second report Thursday showed business for service industries increasing in March after the slowest pace in four years, showing the biggest part of the U.S. economy was starting to thaw with the weather.
The Institute for Supply Management’s nonmanufacturing index rose to 53.1, less than forecast, from 51.6 in February, the Tempe, Ariz.-based group said. Readings greater than 50 signal expansion. The median projection in a Bloomberg survey of economists called for a gain to 53.5.
American shoppers began returning to stores and auto dealers as weather conditions improved and job gains helped brighten spirits. The pickup in optimism among service companies followed a report earlier this week showing a faster pace of expansion at manufacturers, indicating the economy was building momentum into the second quarter.
“We’ve all been blaming slower action on weather, and this suggests that there is underlying momentum in growth,” said Samuel Coffin, an economist at UBS Securities LLC in Stamford, Conn. “We have growth accelerating over the rest of the year after a weather-weakened firstquarter, and this generally fits that idea.” Information for this article was contributed by Josh Boak of The Associated Press and by Lorraine Woellert, Jeanna Smialek and Kristy Scheuble of Bloomberg News.
Business, Pages 27 on 04/04/2014