New claims for unemployment benefits jumped unexpectedly last week, mostly because state agencies processed a backlog of
claims caused by snowstorms the previous week.
The severe weather also increased temporary layoffs in the weather-sensitive construction and transportation industries.
Still, the increase in claims underscored concerns that layoffs are no longer slowing as fast as they were in the second
half of last year.
"The fact that these snowstorms—as bad as they were—could have such an impact is more testimony to the fragility
of the recovery," Diane Swonk, chief economist at Mesirow Financial, wrote in a note to clients. "The recovery is
still on thin ice and lost momentum in the first quarter."
The jobless claims report, along with economic anxiety in Europe, contributed to unease on Wall Street. In midmorning trading,
the Dow Jones industrial average fell about 150 points, or about 1.5 percent. Broader stock averages also dropped.
A separate report Thursday on orders for big-ticket manufactured goods was mixed. The Commerce Department said durable goods
orders shot up in January by 3 percent, the most in six months.
But that gain resulted from a surge in orders for aircraft. Excluding transportation, durable goods orders fell by 0.6 percent,
a weaker showing than economists had expected.
In its report on jobless claims, the Labor Department said first-time claims for unemployment insurance rose by 22,000, to
a seasonally adjusted 496,000. Wall Street analysts polled by Thomson Reuters expected a drop to 455,000.
Economists closely watch initial claims, which are considered a gauge of the pace of layoffs and an indication of companies'
willingness to hire new workers.
Dan Greenhaus, chief economic strategist at Miller Tabak, said the claims data has been unusually distorted in recent weeks
because of bad weather. As a result, "we are concerned about the upward pressure on initial claims but not overly concerned."
Still, the job market "remains quite stressed" as "robust employment growth remains elusive," he wrote
in a note to clients.
The four-week average of claims, which smooths volatility, rose by 6,000 to 473,750. The four-week average has risen by about
30,000 in the past month, raising concerns that job cuts are continuing. Initial claims had fallen sharply over the summer
and fall but the improvement has stalled since the year began.
The economy has grown for six months but is not yet spurring new hiring. Many economists point out that the current recovery
is weak compared to the aftermath of previous deep recessions.
The Labor Department said earlier this month that while the unemployment rate fell to 9.7 percent from 10 percent, employers
still cut 20,000 jobs. The economy has lost 8.4 million jobs since the recession began.
The Federal Reserve said last week that it expects the rate will average between 9.5 percent and 9.7 percent this year.
The number of people continuing to claim unemployment benefits, meanwhile, was essentially unchanged at 4.6 million. Those
figures, known as "continuing claims," lag initial claims by a week.
But there are now many more people receiving extended unemployment benefits that aren't included in the continuing claims
figures. Congress has provided up to 73 weeks of extra benefits, paid for by the federal government, for jobless workers who
have used up the standard 26 weeks of benefits customarily provided by states.
About 5.7 million people received extended benefits in the week ended Feb. 6, the latest data available, down from more than
6 million the previous week. The extended benefit data isn't seasonally adjusted and is volatile from week to week.