Rise in jobless claims signals bump in recovery
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WASHINGTON - A surprising jump in first-time claims for unemployment aid sent a painful reminder today that jobs remain scarce six months into the economic recovery.
The surge in last week's claims deflated hopes among some analysts that the economy would produce a net gain in jobs in January and help fuel the recovery.
A Labor Department analyst said much of the increase was due to holiday-season-related administrative backlogs at the state agencies that process the claims. Still, economists noted that that would mean claims in previous weeks had been artificially low. Those earlier declines had sparked optimism that layoffs were tapering and that employers would add a modest number of jobs in January.
The January employment report will be issued Feb. 5. But the surveys used to compile that report were done last week, so economists are paying close attention to the jobless claims figures from that week.
"The trend in the data is still discouraging," Diane Swonk, chief economist for Mesirow Financial, wrote in a note to clients. "Hopes for a positive employment number in January ... are rapidly dimming."
The disappointing jobless claims report contributed to a gloom on Wall Street. The Dow Jones industrial average dropped 182 points by late morning, or 1.7 percent, and broader indexes also fell.
A separate report today that seeks to forecast future economic activity offered a more positive outlook. The Conference Board's index of leading economic indicators jumped 1.1 percent in December, suggesting that economic growth could pick up this spring.
In its report on jobless claims, the Labor Department said initial claims for unemployment aid rose by 36,000 to a seasonally adjusted 482,000. Wall Street economists had expected a small drop, according to Thomson Reuters. The four-week average, which smooths fluctuations, rose for the first time since August, to 448,250.
Initial claims had dropped steadily since last fall as companies cut fewer jobs. First-time claims have dropped by 50,000, or nearly 10 percent, since late October.
First Published January 21, 2010 12:49 pm
