New claims for jobless benefits rise sharply
The number of people filing new claims for jobless benefits jumped last week after three straight declines, another sign that the pace of layoffs has not slowed.
Initial claims for jobless benefits rose by 12,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. It was the highest level in a month and overshadowed a report that consumer prices remain essentially flat. First-time jobless claims have hovered near 450,000 since the beginning of the year after falling steadily in the second half of 2009. That has raised concerns that hiring is lackluster and could slow the recovery.
Additionally, the Commerce Department said Thursday that the broadest measure of U.S. trade rose during the first quarter to the highest point in more than a year. Much of the widening deficit was due to higher prices on imported oil during the first three months of the year.
The four-week average for unemployment claims, which smooths volatility, dipped slightly to 463,500. That’s down by 3,750 from the start of January.
“Most market economists have been expecting claims to fall below 450K for several weeks now,” said Kevin Logan, an economist with HSBC Securities. “The wait is getting longer and longer. As each week goes by, doubts about the underlying strength of the economic expansion grow.” Economists say they will feel more optimistic that the economy is creating jobs once initial jobless claims fall below 425,000 per week.
The number of people continuing to claim benefits rose by 88,000 to 4.57 million. That doesn’t include about 5.2 million people who receive extended benefits paid for by the federal government. Congress has added 73 weeks of extra benefits on top of the 26 weeks typically provided by states. All told, about 9.7 million people received unemployment insurance in the week ending May 29, the most recent data available.
The extended benefit program expired this month. The House has approved an extension of the benefits through November. The Senate has yet to act.
Commerce reported that the deficit in the current account increased to $109 billion in the January-March period, compared to a revised $100.9 billion in the fourth quarter of last year. The 8 percent increase in the first quarter deficit marked the third straight quarterly increase in the deficit, which now stands at the highest point since the final three months of 2008.
The current account is the broadest measure of foreign trade because it measures not only trade in goods and services, which are tracked by the government on a monthly basis, but also investment flows between countries. The figure is watched closely by economists because it is a measure of how much the United States must borrow from foreigners to finance its balance of payments imbalance.
In the first quarter, exports of U.S. products rose by 5.2 percent, reflecting gains in sales of chemicals and heavy machinery and equipment. However, imports of foreign goods increased faster, rising by 6 percent, with much of this increase reflecting a larger foreign oil bill.
Alan Zibel / Associated Press
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