US--Economy
Despite persistent layoffs, the economy seems to be faring better than it was at the start of the year.
The Labor Department said Thursday that new jobless claims jumped unexpectedly last week. And the number of people continuing to receive unemployment aid rose more than expected.
The figures indicate that jobs remain scarce even as the economy shows some signs of recovering from the longest recession since World War II.
A revised reading on gross domestic product -- the broadest measure of the nation’s output -- said the economy posted a 5.5% annualized decline from January through March. That was slightly better than the 5.7% estimate made a month ago.
Economists generally think the economy is shrinking at a slower pace -- about 2% -- in the current quarter.
The main forces behind the small upgrade in the first quarter were that businesses didn’t cut stockpiles of goods as much, and imports dropped more sharply than previously estimated.
On Wall Street, investors shrugged off the unexpected rise in jobless claims and focused on positive earnings reports from home builder Lennar Corp. and home furnishings store Bed Bath & Beyond Inc.
The Dow Jones industrial average jumped 172.54 points, or 2.1%, to 8,472.40. Other market gauges also increased more than 2%.
Initial claims for jobless benefits rose last week by 15,000 to a seasonally adjusted 627,000. Economists had expected a drop to 600,000.
Several states reported more claims than expected from teachers, cafeteria workers and other school employees, a Labor Department analyst said.
The number of people who are continuing to receive unemployment insurance rose by 29,000 to 6.74 million, slightly above analysts’ estimates of 6.7 million.
The four-week average of claims, which smooths out fluctuations, was largely unchanged at 616,750.
Most economists still expect the number of initial unemployment insurance claims, which reflects the level of layoffs, to decline slowly in coming months as the recession bottoms out.
“We still firmly believe that the underlying trend in claims is downwards, but it is slow and uneven,” Ian Shepherdson, chief U.S. economist for High Frequency Economics, wrote in a client note.
The number of people continuing to receive unemployment aid remains below the peak of 6.8 million reached May 30. That means job losses are probably slowing, economists said.
Meanwhile, the rebound in consumer spending in the first quarter was slightly less vigorous than previously reported. Consumers boosted their spending at a 1.4% rate, down from a 1.5% growth rate estimated last month.
Still, that was the strongest showing in nearly two years and a huge improvement from the fourth quarter, when skittish consumers slashed spending by the most in nearly three decades.
The nation’s unemployment rate hit a quarter-century peak of 9.4% last month, when employers eliminated 345,000 jobs. Joseph LaVorgna, chief U.S. economist at Deutsche Bank, forecasts that employers will have cut a net total of 325,000 jobs this month and that the unemployment rate will rise to 9.6%.
The June employment report will be released Thursday.
