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Unemployment-aid applications rise to 386,000
WASHINGTON (AP) — More Americans sought unemployment aid last week, suggesting hiring remains sluggish.
The Labor Department said Thursday that weekly unemployment benefit applications rose 6,000 to a seasonally adjusted 386,000, an increase from an upwardly revised 380,000 the previous week.
The four-week average, a less volatile measure, rose for the third straight week to 382,000. That’s the highest in six weeks.
Weekly applications are a measure of the pace of layoffs. A drop below 375,000 typically suggests that hiring is strong enough to reduce the unemployment rate.
“The trend in jobless claims suggests … that the underlying pace of employment growth has softened,” said Bricklin Dwyer, an economist at BNP Paribas.
Applications fell steadily during the fall and winter but have leveled off since.
At the same time, hiring has slowed, raising concerns about the pace of the recovery. Employers added an average of only 96,000 jobs per month in the past three months. That’s down from an average of 252,000 in the previous three months.
Weaker hiring also pushed up the unemployment rate in May to 8.2 percent, its first rise in nearly a year.
Joseph LaVorgna, an economist at Deutsche Bank, said the increase in applications was “slightly disconcerting” but added that more data would be needed to establish a trend. Still, he forecasts that the economy will gain only 75,000 jobs this month.
Faster job creation is crucial in order to accelerate growth. More jobs mean more income for consumers, which may lead to higher spending. Consumer spending fuels about 70 percent of the economy.
The number of people continuing to receive benefits fell sharply, partly because extended benefit programs are ending in many states.
The total benefit rolls fell to 5.8 million in the week ending May 26, the latest data available. That’s a drop of 146,000 from the previous week.
Many economists blame the slowdown in hiring partly on the unusually warm winter. Companies moved up some hiring in January and February that normally would have occurred in spring. As that trend fades, job gains might recover in the coming months.
Federal Reserve Chairman Ben Bernanke said last week that the warm winter might be a reason for the slowdown in hiring. He also suggested that the burst of job gains earlier this year could have represented a “catch-up in hiring’ by employers who cut too deeply in the recession.
In that case, stronger economic growth would be needed to boost hiring further, Bernanke said.
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