Ahead of the Bell: Unemployment benefits

AP News
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Posted: May 05, 2011 6:52 AM

Fewer people likely applied for unemployment benefits last week, partly reversing large gains in two out of the past three weeks.

Economists forecast that unemployment benefit applications fell by 19,000 to a seasonally adjusted 410,000 in the week ending April 30, according to a FactSet survey.

Applications near 375,000 are typically consistent with sustainable job growth. Weekly applications peaked during the recession at 659,000.

Applications have jumped sharply in the past three weeks, rising 44,000 or 11 percent to 429,000 in the week ending April 23. The four-week average increased to 408,500, its third straight rise and the first time it has topped 400,000 in two months.

Economists attributed much of the rise to temporary factors, such as the shutdown of U.S. auto plants due to parts shortages stemming from Japan's earthquake. The government also has difficulty adjusting for the impact of the Easter holiday, which fell much later than usual this year.

Still, the increases have raised concerns among economists that the recovery in the job market could be slowing. A private trade group said Wednesday that a measure of employment growth in the service sector, which employs 90 percent 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.

The report prompted some analysts to worry that the economy may not generate as many jobs in April as they have projected.

Employers likely added 185,000 jobs in April, economists forecast, and the unemployment rate remained 8.8 percent. The April jobs report is scheduled to be released Friday.

Companies have stepped up hiring in recent months. Businesses added more than 200,000 jobs in March for the second straight month, the biggest two-month hiring spree in five years.

More jobs should provide more income for consumers to spend, which is key to fueling economic growth. Consumer spending accounts for 70 percent of the economic activity.