Jobless Claims Climb; So Does Worker Output

New claims for jobless benefits rose last week to the highest level since December, the government said Thursday, in a report that probably heralds a surge in the February unemployment rate.

In other economic news, the Labor Department said U.S. worker productivity rose last year at the fastest clip since 1950 as wary businesses extracted more from their workforces -- a trend that has apparently lingered this year, based on the jobless rolls.

A separate report showed new orders to manufacturers in January posting their biggest monthly gain since mid-2002 on the back of auto sales.

The Labor Department said initial jobless claims jumped by 12,000 to a seasonally adjusted 430,000 for the week ended March 1, the highest level since December. The department said some of the increase was due to a rise in claims from workers affected by winter storms in the East in recent weeks.

The four-week average of claims, seen as a better gauge of labor conditions because it irons out weekly gyrations, rose to 408,750 from 400,000, also the highest since December.

The jump in claims “underscores the fragility of labor market conditions,” said Anthony Chan, economist at Banc One Investment Advisors in Columbus, Ohio.

“They certainly confirm the view that the economy is not creating, on balance, any new jobs at the moment,” Chan said.

Economists will look to the February payrolls report today for a clearer view of the job market. Growth in payrolls outside the farm sector is expected to be meager at best. The overall unemployment rate is expected to increase to 5.9% from 5.7% in January.

“Part of it is weather-related and part of it is the economy,” said Avery Shenfeld, an economist at CIBC World Markets.

Experts note that layoffs can become self-perpetuating in a weak economy as businesses find they can do as much or more with fewer people.

To that point, the Labor Department said the hourly output of workers outside the farm sector increased by 0.8% in the fourth quarter, a big improvement from the 0.2% fall previously reported.

For the year, nonfarm productivity advanced by 4.8%, the biggest annual gain since 1950, the department said.

“With productivity gains like these, it’s not surprising that hiring was so weak” in recent months, said Joel Naroff of Naroff Economic Advisors in Holland, Pa.

Meanwhile, in a sign of hope that the struggling manufacturing sector may have started off this year with some momentum, factory orders in January posted their biggest gain since last summer, a Commerce Department report Thursday showed.

Factory orders rose 2.1% to a seasonally adjusted $327.1 billion in January, after a revised 0.3% gain in December. The latest increase was the biggest since a 4.4% gain in July 2002.

Orders for durable goods -- those meant to last at least three years -- rose 2.9%.

But the Institute for Supply Management’s report early this week on February manufacturing activity showed the sector slowed again. A Federal Reserve report confirmed the trend.