WASHINGTON - The number of people seeking U.S. unemployment benefits rose 68,000 last week to a seasonally adjusted 368,000, the largest increase in more than a year.
The surge in first-time applications
could be a troubling sign if it lasts. But it likely reflects the difficulty
adjusting for delays after the Thanksgiving holiday.
The Labor Department said Thursday
that the less volatile four-week average rose 6,000 to 328,750. That is close
to pre-recession levels and generally a positive sign for job gains.
Applications had tumbled in recent
weeks to nearly six-year lows, partly because of a late Thanksgiving holiday
that may have distorted the government's seasonal adjustments. Economists
believe this week's jump in claims was a dose of payback for those declines.
"What the seasonals give in one
month they have to take back the next, hence today's number," said Ian
Shepherdson, chief economist at Pantheon Macroeconomics.
Applications for unemployment aid are
a proxy for layoffs. A steady decline over the past year suggests that fewer
Americans have lost their jobs. Economists will track the next few weeks
closely to see if that trend is reversing, or if the surge is a temporary blip
caused by seasonal adjustments.
The recent drop in layoffs has
coincided with a pickup in hiring. The economy has added an average of 204,000
jobs a month from August through November, up from an average of 146,000 in May
Employers added 203,000 jobs last
month and the unemployment rate dropped to a five-year low of 7 percent, the
government said Friday. Four straight
months of robust hiring have raised hopes that 2014 will be the year the
economy returns to normal. As more Americans draw a paycheck, incomes and
consumer spending generally increase. About 70 percent of economic activity
comes from consumer spending.
However, the unemployment rate remains
above the historic averages of 5 percent to 6 percent that are associated
strong job markets.
A healthier job market could lead the
Federal Reserve to begin scaling back its extraordinary economic stimulus
programs. The Fed has been buying $85 billion in bonds each month to keep
long-term interest rates low and encourage borrowing and spending.
More than 3.8 million people collected
some form of unemployment benefits in the last full week of November.
However, 1.25 million of them could
soon lose those benefits. They received aid under a special federal program for
the long-term unemployed that is set to expire on Dec. 28.
The program extends aid that usually
expires after six months for roughly 28 weeks. Congressional leaders have
proposed a budget deal that would not preserve the additional benefits, meaning
that as many as 2.1 million Americans would lose this assistance by March.