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Applications for US unemployment aid jumped last week to 329K, likely due to Easter layoffs

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WASHINGTON - The number of people seeking U.S. unemployment benefits surged 24,000 to a seasonally adjusted 329,000 last week, though the gain likely reflected temporary layoffs in the week before Easter.

The Labor Department said Thursday that the four-week average of applications, a less volatile number, rose 4,750 to 316,750. The four-week average fell two weeks ago to its lowest level since October 2007, two months before the recession began.

Applications can be volatile around Easter, because many school systems temporarily lay off bus drivers, cafeteria workers and other employees during spring break. Some of those workers file for unemployment benefits. Because the timing of Easter shifts each year, it can be difficult for the government to seasonally adjust for the holiday. Last year, Easter fell on March 30, this year on April 20.

"The underlying trend in claims is falling, albeit slowly," said Ian Shepherdson, an economist at Pantheon Macroeconomics. "When the economy picks up, companies hold back on firings before they start increasing hiring, so a sustained drop in claims would be a clearly positive sign" for hiring.

Despite the volatility, applications for unemployment benefits have generally declined in recent months, a hopeful sign for the job market. Three weeks ago, they fell to 301,000, the lowest level in nearly seven years.

A year ago, they stood at 343,000. Because applications are a proxy for layoffs, the low level is a sign that employers expect consumer demand to continue and are holding onto their workers.

About 2.9 million people received benefits in the week that ended April 5, the most recent period for which data are available. That was about 85,000 fewer than in the previous week.

In the meantime, hiring has picked up. Employers added 192,000 jobs in March, according to a separate government report. That followed gains of 197,000 in February. The unemployment rate has declined in recent months but remains a still-high 6.7 per cent.

Winter storms in January and December shut down factories, kept shoppers away from stores and depressed home buying. That reduced hiring and overall economic growth. Employers added just 129,000 jobs in January and only 84,000 in December.

More jobs and higher incomes will be needed to spur healthier overall economic growth. For now, economists think the bad weather contributed to weak growth of 1 per cent to 1.5 per cent at an annual rate in the January-March quarter. But with the weather improving, most analysts expect growth to rebound to an annual rate of nearly 3 per cent in the April-June quarter.

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