The number of Americans filing new claims for unemployment benefits rose to its highest level in four months last week, suggesting the labor market recovery lost some steam in March.
Initial claims for state unemployment benefits increased 28,000 to a seasonally adjusted 385,000, the highest level since November, the Labor Department said on Thursday. It was the third straight week of gains in claims. Coming on the heels of data on Wednesday showing private employers added the fewest jobs in five months in March, the report implied some weakening in job growth after hiring accelerated in February. Economists polled by Reuters had expected first-time applications last week to fall to 350,000. The four-week moving average for new claims, a better measure of labor market trends, rose 11,250 to 354,250.
A Labor Department analyst said claims for California and the Virgin Islands had been estimated and there were no special factors in the underlying state-level data. While the claims report has no bearing on Friday's nonfarm payrolls data for March as it falls outside the survey period, it hinted at some weakness in hiring. Employers are expected to have added 200,000 jobs to their payrolls last month, according to a Reuters survey, slowing from February's brisk 236,000. The jobless rate is seen unchanged at 7.7 percent. Claims over the next several weeks will be watched closely for signs of layoffs related to $85 billion in government budget cuts known as the "sequester." The labor market is key to the Federal Reserve's monetary policy. This month the central bank said it would maintain its monthly $85 billion purchases of mortgage and Treasury bonds to keep rates low and foster faster job growth. The number of people still receiving benefits under regular state programs after an initial week of aid dropped 8,000 to 3.06 million in the week ended March 23.