More people applied for unemployment benefits last week, the first increase in three weeks and evidence that the job market is still sluggish.
The number of people seeking benefits rose by 10,000 to a seasonally adjusted 424,000, the Labor Department said Thursday. No states cited extreme weather as a factor in the increase, a department spokesman said. Tornadoes and floods have devastated several states in the Midwest and South in the past month.
Applications are above the 375,000 level that is consistent with sustainable job growth. Applications peaked at 659,000 during the recession.
“The job market isn’t exactly improving with leaps and bounds,” Jennifer Lee, an economist at BMO Capital Markets, said in a note to clients. “Businesses are hiring but are likely holding back until they’re more comfortable and confident with the current economic environment.”
Still, the four week average, a less volatile measure, declined for the first time in seven weeks to 438,500.
Employers stepped up hiring this spring, but some economists worry that rising applications indicate hiring is slowing.
A separate report showed that the economy grew 1.8 percent in the January-March quarter, a slowdown from the 3.1 percent annual pace recorded in the October-December period. Consumer spending grew at a much slower pace, as shoppers were held back by high unemployment and $4 a gallon gas.
So far, the economy has been generating jobs at a healthy pace this year. Businesses have added a net total of more than 250,000 jobs per month, on average, in the past three months, the fastest hiring spree in five years. The unemployment rate has dropped nearly a full percentage point in the past five months, though it remains a very high 9 percent.
But several economists said that the number of jobs added in May will likely dip below 200,000 for the first time since January.
“We’re losing some momentum in employment,” said Brian Levitt, an economist at OppenheimerFunds. He expects companies will create about 150,000 to 175,000 jobs this month. Higher gas prices are acting as a tax on consumers, restraining their spending, he said.
Gas prices dipped to an average of $3.81 per gallon Thursday, down from $3.91 a week ago. But they are $1.04 higher than a year ago.
The total number of people receiving benefits is also falling. The unemployment benefit rolls declined 46,000 to 3.7 million in the week ending May 14. That figure lags the applications data by one week.
Roughly 4 million additional people are receiving benefits under emergency programs enacted during the recession. All told, 7.7 million people received unemployment benefits during the week ending May 7, the most recent data available. That’s a drop of almost 200,000 from the previous week.
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