U.S. jobless claims rise, but labor market healing

WASHINGTON Fri Mar 9, 2012 1:13am IST

A man carrying a stack of job listings listens to a discussion at the One Stop employment center in San Francisco, California, August 12, 2009. REUTERS/Robert Galbraith/Files

A man carrying a stack of job listings listens to a discussion at the One Stop employment center in San Francisco, California, August 12, 2009.

Credit: Reuters/Robert Galbraith/Files

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WASHINGTON (Reuters) - The number of Americans filing for jobless benefits unexpectedly rose last week, but not enough to change perceptions that the labor market was strengthening.

Initial claims for state unemployment aid increased 8,000 to 362,000, the Labor Department said on Thursday. Even with the increase, new claims remained near the four-year low reached last month. They have dropped about 40,000 since the start of 2012.

Economists who had expected claims to stay at 351,000, shrugged off the rise, which marked three straight weeks of small gains since breaching a four-year low in mid-February.

"You are bound to get some uptick even when the overall trend is downward. The labor market is improving, but it's still quite impaired," said Paul Edelstein, an economist at IHS Global Insight in Lexington, Massachusetts.

A four-week moving average of new claims, considered a better gauge of labor market trends, held near a four-year low.

The data has no bearing on Friday's closely watched employment report for February, which is expected to show solid job growth and could reduce the chances of extra stimulus measures from the Federal Reserve.

The government is expected to report the economy added 210,000 new jobs last month, according to a Reuters survey, adding to January's tally of 243,000.

That would mark three consecutive months of nonfarm payrolls growth above 200,000. The unemployment rate is seen holding at a three-year low of 8.3 percent.

Data on Wednesday showed private employers stepped up hiring in February. That improving labor market tone was reinforced by a separate report on Thursday showing planned layoffs at U.S. companies declined 3.3 percent last month.

With labor market conditions improving, Americans are starting to take on more debt.

Household debt in the fourth quarter rose for the first time in 3-1/2 years, the Federal Reserve said in a separate report. But after-tax incomes rose even faster than liabilities, easing debt burdens and putting consumers in better shape to drive the recovery.

SLOWING PRODUCTIVITY BEHIND JOB GAINS

The claims data had little impact on U.S. financial markets, with traders taking their cue from developments on the Greek debt issue and comments from European Central Bank President Mario Draghi.

The U.S. economy has added 917,000 jobs since September, a surprisingly strong figure given the economy has not been particularly robust.

Instead, business productivity has suffered. As companies have added new workers, the amount of output workers produce per hour has slowed.

"One of the primary reasons that the labor market appears to have gone from an underlying 125,000 payroll increase to 175,000 is that productivity growth has slowed sharply," said Steven Ricchiuto, chief economist at Mizuho Securities in New York.

Despite significant job gains, the recovery in the labor market remains painfully slow. The number of people still receiving benefits under regular state programs after an initial week of aid rose in the week ended February 25.

In January, about 43 percent of the 12.8 million unemployed Americans had been out of work for more than 6 months, a major cause of concern for the Fed.

Fed policymakers, who meet on Tuesday, appear to be in a wait and see mode, neither ready to launch another round of bond buying nor ease off extraordinary support for the recovery.

Moreover, 23.8 million people are either out of work or underemployed and there are no job openings for nearly three out of every four unemployed people.

(Editing by Neil Stempleman)

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