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Jobless claims pushed higher by wintry weather

The number of people applying for unemployment benefits rose sharply last week, but the figures were largely distorted by rare snowstorms that swept through the Southeast.
/ Source: msnbc.com news services

The number of people applying for unemployment benefits rose sharply last week, but the figures were largely distorted by rare snowstorms that swept through the Southeast.

Applications surged last week by a seasonally adjusted 51,000 to 454,000, the highest level since late October, the Labor Department said Thursday.

A government analyst said that a major reason for the spike was the harsh weather in Alabama, Georgia, North Carolina and South Carolina. That forced many companies to shut down temporarily and also prevented many people from applying for benefits in the previous week.

When state offices, which had closed, reopened and people were able to file applications that pushed the number of requests up sharply, the analyst said.

The four southern states reported a large increases in the number of requests for unemployment benefits. Trucking companies, delivery firms, construction companies and others were affected.

Many economists consider data in January less reliable because of seasonal fluctuations.

Applications below 425,000 tend to signal modest job growth. But they would need to dip consistently to 375,000 or below to indicate a significant decline in the unemployment rate.

Even with last week's increase, economists are optimistic that layoffs will slow and that hiring will pick up this year.

"The market was looking for an improving trend, but we didn't get it. We're in a recovery but it isn't smooth or without its setbacks," said Peter Tuz, president of Chase Investment Council.

The four-week moving average of unemployment claims — a better measure of underlying trends, rose 15,750 to 428,750 last week, implying a gradual labor market recovery that could compel the Federal Reserve to complete its $600 billion bond buying program aimed at bolstering the economy.

The average had hit a two-year low of 411,250 on Jan. 1. That had suggested companies -- operating with lean work forces -- may need to add more workers as the economy gains momentum.

U.S. factories saw a disappointing drop in demand for their products in December, reflecting weakness in demand for commercial and military aircraft.

The Commerce Department said orders to factories for long-lasting durable goods dropped 2.5 percent last month after an even larger 3.1 percent decline in November. The weakness in both months reflected big declines in demand for aircraft.

"That was discouraging and that basically helps to justify the Fed's decision to maintain its asset purchase program," said Joe Manimbo, a currency trader for Travelex Global Business Payments.

Excluding the transportation sector, orders rose 0.5 percent in December following a 4.5 percent jump in orders outside of transportation in November.