Jobless-aid claims rise to 326,000

Despite 28,000 jump, economists optimistic on job market

Kim Thy of the New York City Police Department (NYPD), right, speaks with job seeker Eric Swasey of Manhattan at Choice Career Fairs' New York career fair at the Holiday Inn Midtown in New York, U.S., on Tuesday, May 13, 2014. The U.S. Department of Labor is scheduled to release initial and continuing jobless claims data on May 15. Photographer: Craig Warga/Bloomberg *** Local Caption *** Kim Thy; Eric Swasey
Kim Thy of the New York City Police Department (NYPD), right, speaks with job seeker Eric Swasey of Manhattan at Choice Career Fairs' New York career fair at the Holiday Inn Midtown in New York, U.S., on Tuesday, May 13, 2014. The U.S. Department of Labor is scheduled to release initial and continuing jobless claims data on May 15. Photographer: Craig Warga/Bloomberg *** Local Caption *** Kim Thy; Eric Swasey

WASHINGTON -- The number of people seeking U.S. unemployment benefits jumped last week but remained at a low level that economists said suggests hiring should remain steady.

Applications rose 28,000 to a seasonally adjusted 326,000, the Labor Department said Thursday. The increase comes after applications fell to their lowest level since May 2007 two weeks ago.

The four-week average, a less volatile measure, dipped 1,000 to 322,500. The average reached a seven-year low of 312,000 last month. Applications are a proxy for layoffs, so the low levels suggest companies are cutting few jobs.

"The drift over the last couple of weeks was lower, and we expect that to continue," said Gennadiy Goldberg, a U.S. strategist at TD Securities USA in New York.

The number of people receiving unemployment benefits fell by 13,000 to 2.65 million, the fewest since Dec. 1, 2007, when the recession began.

"Don't be disappointed," Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a research note. "The trend is downwards, signaling faster payroll growth."

The recent decline in firings has been accompanied by healthier hiring. Employers are adding more jobs, though unemployment remains at historically high levels.

The economy gained 288,000 jobs in April, the most in 2½ years, and the unemployment rate fell to 6.3 percent from 6.7 percent. But the rate drop occurred because fewer people looked for work. The government doesn't count people as unemployed unless they are actively searching.

In the first four months of this year, employers have added an average of 214,000 jobs per month, up from 194,000 last year.

The improved hiring may help speed economic growth for the rest of 2014. More jobs means more people with paychecks to spend.

The economy grew just 0.1 percent at an annual rate in the first three months of this year, largely because winter weather kept consumers away from shopping malls, and discouraged home and car sales. Data that has been released since then suggests that the economy actually contracted in the first quarter by as much as 0.8 percent, analysts say.

Still, economists expect growth will accelerate to a healthy pace of about 3.5 percent in the second quarter, as consumer spending and homebuilding rebound from the winter. Growth may slow a bit in the second half of the year as the bounce-back fades. But it should top 2.5 percent for the whole year, economists forecast.

The progress in employment, together with rising real estate values, is contributing to household purchases at stores including Lowe's Cos., the second-largest U.S. home-improvement retailer. The Mooresville, N.C.-based company posted first-quarter profit that topped analysts' estimates.

"Consumers continue to have an increased willingness to invest in their homes" because home prices keep rising, Chief Executive Officer Robert Niblock said Wednesday.

Information for this article was contributed by Shobhana Chandra of Bloomberg News.

Business on 05/23/2014

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