U.S. jobless claims spike

The number of people seeking jobless benefits jumped sharply last week, after two straight weeks of declines.

The Labour Department said Thursday that initial claims for unemployment aid rose by 20,000 to a seasonally adjusted 457,000 for the week ending Oct. 30. Wall Street analysts polled by Thomson Reuters had expected a smaller rise.

The increase comes after claims fell in four of the previous five weeks. Those drops had brought claims to their lowest level since July and raised hopes the job market was improving.

Instead, claims have risen back above the 450,000 level where they have fluctuated all year. They will need to drop below 425,000 to signal sustained job gains.

The weekly applications for unemployment benefits are volatile but are considered a real-time snapshot of the job market. They reflect the pace of layoffs and indicate whether companies are hiring.

The four-week average of claims, a less volatile measure, rose by 2,000 to 456,000.

Claims fell steadily last year, from about 600,000 in June 2009, when the recession ended, to about 470,000 at the end of the year. There has been little improvement since then.

The unemployment claims report comes one day before the Labour Department is to release the jobs figures for October. Economists project the October report will show that employers added a net total of 60,000 jobs that month, while the unemployment rate remained 9.6 per cent for the third straight month.

That would be an improvement from September, when the economy lost 95,000 jobs. But September's figures were made worse by a loss of 77,000 temporary census workers. Few temporary census workers remain and won't have much impact on Friday's report.

The economy needs to add at least 200,000 jobs a month to keep up with population growth and to help get some of the 15 million unemployed back to work.

The number of people continuing to claim unemployment benefits dropped by 42,000 to 4.34 million, the lowest since November 2008. But that doesn't include several million people claiming extended unemployment aid, paid for by the federal government. More than five million people received the emergency benefits during the week ending Oct. 16, the latest data available.

All told, more than 8.7 million people received jobless benefits that week. Bank of Montreal economist Jennifer Lee noted this means the all-in figure has remained below the psychologically important 10 million barrier for three consecutive months.

The emergency benefits program, extended several times by Congress, is set to expire at the end of this month. Many analysts doubt Congress will extend it again. That could cause as many as one million people a month to lose benefits, according to the National Employment Law Project, a non-profit group.