Jobless claims show worrying jump
WASHINGTON - The Labor Department says the number of Americans applying for unemployment benefits leaped last week to the highest level since February 2015, more sobering news for the labor market after a disappointing April jobs report.
Applications for jobless aid rose by 20,000 to a seasonally adjusted 294,000. The four-week average, a less volatile measure, rose by 10,250 to 268,250, highest in nearly three months.
"Today's jobless claims report was a surprise, and not a positive one," said Jim Baird, Chief Investment Officer for Plante Moran Financial Advisors, in a note. "Jobless claims have moved sharply higher in recent weeks, reinforcing concerns that labor market conditions have softened in response to the slowdown in the economy in recent months."
Jobless claims are a proxy for layoffs. Despite last week's increase, they remain low, coming in below 300,000 for 62 straight weeks, longest such streak since 1973.
But employers added just 160,000 jobs in April, the weakest gain this year. The labor market had been shrugging off weak economic growth: The economy expanded at a lackluster 0.5 percent annual pace from January through March.
Jim O'Sullivan, chief U.S. economist with High Frequency Economics, suggested the spike in claims could stem from a technical issue in how the government adjusts jobless data for seasonal differences.
Applications for unemployment benefits were recently at 42-year low, he points out, while noting that the pace of claims over the next few weeks will be an important gauge of whether the job market is slowing.
Another possible contributor to the jump in claims: the Verizon Communications (VZ) strike. Nearly 40,000 employees with the telecom giant remain off the job after launching the work stoppage last month.