Unexpected Spike In Jobless Claims

Bloomberg reports:

U.S. initial jobless claims unexpectedly rose last week, a sign that the labor market is struggling to gain traction.

Jobless claims increased by 1, 000 to 427,000 in the week ended June 4, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected a drop in claims to 419,000, according to the median forecast. The number of people on unemployment benefit rolls and those receiving extended payments decreased.

Some employers are cutting staff as demand slows because of elevated energy prices, falling house prices and tight credit. The economy generated the fewest jobs in May in eight months and the unemployment rate rose, a report showed last week.

“The labor market is obviously struggling,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, said before the report. “I expect claims to stabilize and eventually come down.”

It was the ninth consecutive week that claims were above 400,000. They reached a two-year low of 375,000 in February.

The median forecast was based on a survey of 49 economists. Estimates ranged from 400,000 to 430,000. The Labor Department revised the prior week’s figure to 426,000 from the 422,000 initially reported.

Payrolls grew by 54,000 workers last month after increasing by 232,000 in April, Labor Department data showed last week. The jobless rate rose to 9.1 percent from 9 percent.