ECONOMIC REPORT
Jobless claims surge in latest week
First-time claims jump back to 375,000, the loftiest level since October
By Greg Robb, MarketWatch
Last update: 9:14 a.m. EST Jan. 31, 2008
WASHINGTON (MarketWatch) -- First-time jobless claims rocketed higher last week.
Initial claims for state unemployment benefits rose 69,000 in the week ended Jan. 26, reaching 375,000, the Labor Department reported Thursday. It marked the highest level since early October -- and the biggest weekly jump since September 2005 in the wake of Hurricane Katrina. Read government release.
Before this sharp rise, jobless claims had fallen by a net of 51,000 since late December, confounding economists who had expected claims to gradually rise as the nation's economy slowed.
Analysts had been expecting an increase, but nothing nearly as large as last week's gain: The consensus forecast as compiled by MarketWatch had called for claims to rise to about 320,000. See Economic Calendar.
On Wall Street, stocks futures fell steeply in the wake of the claims data. See full story.
Economists said recent claims figures need to be interpreted with caution, as history shows this time of year to be very volatile.
A Labor Department official attributed the large increase to difficulties adjusting to the Martin Luther King Jr. federal holiday.
Non-seasonally adjusted claims actually fell in the latest week, but seasonal factors expected a much steeper decline.
All the same, Robert Brusca, chief economist at FAO Economics, said that, despite the technical noise, claims are now indicating a "border-line recession warning."
The average number of workers filing claims over the past four weeks rose by 10,250 to 325,750 last week.
The four-week average is considered a better gauge of the labor market than the volatile weekly number.
The claims data measure the number of workers who lost their jobs through no fault of their own and were eligible for unemployment benefits. They reflect layoffs, not hiring.
The report comes one day before the U.S. employment report for January, which is bound to be watched even more closely than usual for hints of how much the economy is slowing down.
A survey conducted by Automated Data Processing reported that 130,000 private-sector jobs were created in the month.
As a result, many economists have been raising their forecasts for what Friday's figure for nonfarm payrolls will show, increasing to about 100,000 jobs from previous estimates around 70,000 jobs.
In the week ended Jan. 19, the number of workers still collecting jobless benefits rose 47,000 to 2.72 million.
The four-week moving of continuing claims fell 9,500 to stand at 2.71 million.
In a separate report Thursday, the Labor Department said that the employment cost index rose 0.8% in the fourth quarter, the same pace as in the prior three-month period. See full story.
In addition, the Commerce Department reported that real consumer spending flattened out in December, further evidence that the economy was getting weaker as the fourth quarter sputtered to an end.
Real consumer spending, adjusted for inflation, was unchanged last month following a 0.4% gain in November. See full story.
Greg Robb is a senior reporter for MarketWatch in Washington.



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