New claims for unemployment benefits rise

Claims for unemployment-insurance benefits remain at a distressingly high level and could forecast trouble for the labor market’s recovery, analysts said Thursday after the government released new data.

The number of initial claims for regular state unemployment insurance benefits rose 2,000 to 484,000 in the week that ended Aug. 7, reaching the highest level since February, the Labor Department reported Thursday. Economists polled by MarketWatch had expected a level of 463,000 for first-time claims.

“The level of claims at the beginning of August is a somewhat worrying sign to us about the strength of the labor market and the recovery in the middle of the third quarter,” wrote analysts with RDQ Economics in a research note.

It’s hard to ignore two consecutive weeks of bad claims numbers, said Ian Shepherdson, chief U.S. economist with High Frequency Economics, in a research note.

“We are left with the uncomfortable notion that the underlying level of claims has probably risen over the past month or so,” Shepherdson wrote. “But if claims remain at their current level, then even the modest recent gains in private payrolls will not be sustained.”

The four-week average of initial claims — which smooths out some volatility — also rose, up 14,250 to 473,500. This level was the highest since February as well.

Though initial claims are down about 13% from the previous year’s level, the data still reflect decidedly sluggish hiring trends. The government recently estimated that the unemployment rate remained at 9.5% in July, unchanged from June.

All told, about 9.8 million people were collecting some type of unemployment benefit in the week that ended July 24, up from about 8.6 million in the previous week.

Mantell writes for MarketWatch.com/McClatchy.