Jobless claims up, fourth-quarter GDP revised up

Thu Mar 28, 2013 9:06am EDT
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By Jason Lange

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits rose more than expected last week, but probably not enough to suggest the labor market recovery was taking a step back.

A separate report on Thursday showed the economy expanded at a sluggish pace in the fourth quarter of 2012 although a big gain in business investment and higher exports of services led the government to push up its previous estimate for growth.

The Labor Department said initial claims for state unemployment benefits increased 16,000 to a seasonally adjusted 357,000. Despite the gain, they were in the middle of their range for this year.

Stock index futures briefly trimmed gains after the two reports were releases.

The four-week moving average for new claims, a better measure of labor market trends, rose 2,250 to 343,000. Still, for many economists a trend reading below 350,000 level points to a firm pace of hiring in March.

A government report due on April 5 is expected to show employers added 197,000 workers to their payrolls in March. That would be slower than during the prior month but still suggestive of a labor market recovery that is gaining traction.

Despite recent a recent acceleration in hiring, the Federal Reserve has appeared worried that budget tightening by the government could dampen progress made in the labor market, and policymakers last week pledged to keep buying bonds at a monthly pace of $85 billion until the labor market outlook improved substantially.

"The underlying growth trend is showing some encouraging signs, but the key risk is how much fiscal tightening we'll see this year," said Laura Rosner, economist at BNP Paribas in New York.   Continued...

A job seeker fills out forms at a table while attending a career fair with prospective employers in New York City, October 24, 2012. REUTERS/Mike Segar