WASHINGTON ? The number of people applying for unemployment benefits surged last week to the highest level in eight months, a troubling sign a day ahead of the government's report on April employment.
Mel Evans, AP
As a long line of job-seekers wait, Lockheed Martin military relations manager Dave Wallace, left, shakes hands with Joe Archatowski, of Lansdale, Pa., at a job fair aimed at helping military and former military members transition to civilian jobs, in Cherry Hill, N.J., on May 3, 2011.
Mel Evans, AP
As a long line of job-seekers wait, Lockheed Martin military relations manager Dave Wallace, left, shakes hands with Joe Archatowski, of Lansdale, Pa., at a job fair aimed at helping military and former military members transition to civilian jobs, in Cherry Hill, N.J., on May 3, 2011.
The Labor Department said Thursday that new claims for unemployment benefits rose 43,000 to 474,000 in the week ended April 30, the third increase in four weeks. The four-week average, a less volatile measure, rose for the fourth straight week to 431,250.
Applications near 375,000 are typically consistent with sustainable job growth. Weekly applications peaked during the recession at 659,000.
Rising unemployment applications and other weak economic data this week have prompted some analysts to worry that higher fuel prices may be causing employers to slow their pace of hiring.
Another report may provide a hopeful sign: Companies squeezed more work out of their staffs in the first three months of the year, but the gain in productivity was much slower than the previous three months.
The Labor Department said productivity rose at an annual rate of 1.6% in the January-March period compared to a 2.9% increase in the previous quarter. Labor costs rose at a 1% annual rate in the January-March period after falling 1% in the previous three months.
A slowdown in productivity growth can be good in the short term when unemployment is high, because it signals companies must hire more workers in order to make further gains. But it is bad for the economy if it persists for a long period.
The government is scheduled to release its April jobs report on Friday. Economists are projecting that the economy likely added 185,000 jobs in April and the unemployment rate may remain 8.8%, but some are now saying the payroll numbers could be lower.
A Labor department spokesman blamed much of the increase in unemployment applications on an unexpected spike from New York. More school systems than usual closed for spring break last week. That resulted in 25,000 layoffs. The department didn't anticipate the closures when making seasonal adjustments, the spokesman said.
Other factors also contributed to the increase, the spokesman said. Oregon launched its own extended unemployment benefit program, which caused an increase in overall applications in the state for unemployment benefits. And auto-related layoffs rose, as some companies have shut down or slowed production due to parts shortages stemming from the earthquake in Japan.
Still, applications have risen sharply in recent weeks, raising concerns that high gas and food prices are cutting into consumer spending and slowing the economy.
Businesses are also facing higher costs for raw materials, which reduce profit margins. They may be cutting back on hiring as a cost-saving measure.
Other recent data have also pointed to a weaker job market.
•A private trade group said Wednesday that a measure of employment growth in the service sector, which employs 90% of the work force, slowed for the second straight month. The report, by the Institute for Supply Management, still showed that employment rose, but at the slowest pace in 7 months.
•Also Wednesday, private payroll processor ADP said that 179,000 private sector jobs were added in April, far less than economists were expecting.
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