The number of people filing new claims for unemployment benefits unexpectedly rose last week by the largest amount in three months. The surge is evidence of how volatile the job market remains, even as the economy grows.
Applications for unemployment benefits rose to 471,000 last week, up by 25,000 from the previous week, the Labor Department said Thursday. It was the first increase in five weeks and the biggest jump since a gain of 40,000 in February.
The total was the highest since new claims reached 480,000 on April 10. It also pushed the average for the last four weeks to 453,500.
"Although no one expects this volatile series to go in one direction every single week, this is clearly a disappointment," said Jennifer Lee, senior economist at BMO Capital Markets.
Stocks slid at the opening bell as investors' already bleak view of the world economy worsened with another drop in the euro and the disappointing U.S. employment news.
The Dow Jones industrial average fell more than 250 points in morning trading. Interest rates dropped sharply in the Treasury market as investors once again sought the safety of U.S. government debt.
In a separate report, a private research group said its index of leading economic indicators dipped slightly in April. It was the first decline in more than a year. Six of the 10 components on the Conference Board's index deteriorated. Among them: U.S. residents filed fewer applications to build homes; vendors were slower in delivering supplies to companies; the unemployed filed more claims for jobless aid; and consumers' confidence dropped.
Lawmakers responded Thursday to the persistently high jobless rate by announcing a deal to extend expanded unemployment benefits for the long-term unemployed through the end of the year. Laid off workers would also continue to get subsidies to buy health insurance through the COBRA program. House leaders plan to vote on the bill Friday, with the Senate voting next week.
Employers are hiring again, but not at levels needed to make a dent in the unemployment rate, which increased in April to 9.9 percent. An improving economy has lured those who had given up looking for work back into the labor market. The jump in the unemployment rate came even though payrolls rose last month by 290,000 jobs, the biggest gain in four years.
Analysts could trim their forecasts for job growth in May based on the sudden rise in new claims. The increase occurred in the week that the government conducts its survey for the monthly unemployment report.
The number of people receiving jobless benefits fell by 40,000 to 4.63 million for the week ending May 8.
However, that figure does not include unemployed workers who have exhausted their regular 26 weeks of benefits. An additional 5.3 million workers are receiving extended benefits paid for by the federal government for the week ending May 1.
The extended benefits have added as many as 73 weeks of unemployment on top of the 26 weeks customarily provided by the states. But jobs have been scarce for so long that many of those out of work will soon run out of the extended benefits.
For the week ending May 8, 35 states and territories saw increases in applications for new jobless benefits and 18 saw declines.
The largest increase came in California, up 8,351 because of layoffs in service industries and manufacturing. It was followed by Michigan, up by 3,175 because of layoffs in the auto industry.
The states with the largest declines in jobless application were: New York, down by 3,144, because of fewer layoffs in transportation, services and manufacturing; and Kentucky, with a drop of 2,193.