Soft Labor Market Remains

Fewer U.S. workers applied for state unemployment benefits last week, the government said on Thursday, but the report nevertheless showed a soft labor market even amid the broader economic recovery.

The layoffs picture continues to be clouded by a technical fluke that was a big factor in the prior week's surge in claims.

Separately, the Labor Department reported that the price of goods imported into the United States in March soared 1.1 percent. A big part of the increase stemmed from a 15.7 percent jump in the price of imported petroleum products, including crude oil, the largest increase in nearly three years.

First-time jobless claims fell by 55,000 to a seasonally adjusted 438,000 for the week ended April 6, the Labor Department said. But while claims decreased last week, the level remained well above Wall Street's expectations and reflected a pickup over the past few weeks in applications for extended unemployment benefits.

The extended benefits program is part of an economic stimulus package enacted by Congress earlier this year to help workers who lost their jobs amid last year's recession and in the aftermath of the Sept. 11 attacks.

The week before, claims shot up by 79,000 to 493,000, according to revised figures. That was an even bigger jump than initially reported.

Because of the refiling requirement, the weekly claims figures — usually a good proxy for layoffs — could be volatile in the next few weeks.

"Even adjusting for the extended claims, the labor market is not improving as rapidly as anticipated," said Sung Won Sohn, Chief Economist at Wells Fargo in Minneapolis.

"This tells us that the GDP (gross domestic product) might be growing very nicely, but employers are still very cautious about hiring people back, electing to utilize existing people, overtime and the part-time agencies," Sohn added.

The four-week moving average, a more reliable measure of employment conditions because it irons out weekly gyrations, rose to 433,750, the highest level since December of last year, from 424,000 the previous week.

Adding to evidence of a still-weak labor market, the number of workers remaining on unemployment aid rose to a seasonally adjusted 3.78 million for the week ended March 30, the highest level recorded in 19 years.

U.S. Treasury bonds rose slightly shortly after the release of the report, as traders gleaned from the data that a high number of U.S workers are remaining jobless.