The number of US workers filing new applications for unemployment insurance unexpectedly rose last week for the first time since early April, suggesting the labour market recovery has hit a stumbling block.
Initial claims for state unemployment benefits increased 25,000 to a seasonally adjusted 471,000 in the week ended May 15th, the highest level since the week ended April 10, the Labor Department said today.
The surprise jump took a toll on US financial markets, already reeling on concerns Europe's debt crisis could put a damper on the US economic recovery.
"It raises the risk that non-farm payrolls might slow down from some of the recent strength. Given the reduced confidence people are having in the economic outlook it just adds to those fears," said David Sloan, an economist at 4CAST in New York.
The claims data fell in the survey week for the government's closely watched employment report for May, which will be released on June 4th.
A US Labor Department official said there was nothing unusual in the state level data.
The four-week moving average of new claims, which is considered a better measure of underlying labor market trends, rose 3,000 to 453,500.
New applications for unemployment benefits had been grinding lower even though payrolls have now grown for four straight months.
Analysts believe the elevated level of initial claims indicates the unemployment rate, which hit 9.9 per cent in April, will remain high for a while and only come down gradually as small businesses are still struggling.
The number of people still receiving benefits after an initial week of aid fell 40,000 to 4.63 million in the week ended May 8th, the US Labor Department said. The level was above market expectations for 4.60 million, but was the lowest since late March.
The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, was unchanged at 3.6 per cent in the week ended May 8th. It was the fifth straight week that the rate was unchanged at that level.
Reuters