Initial Jobless Claims Rise More Than Expected to 326,000 in Week of May 17

More Americans than expected filed for first-time jobless benefits last week, according to the weekly report from Washington, rising from a seven-year low the week prior and continuing to hold at pre-recession levels.

The Labor Department reported that seasonally adjusted initial jobless claims, a proxy of weekly layoffs, rose to 326,000 in the week ended May 17, an increase of 28,000 from a revised 298,000 (up from an original estimate of 297,000) a week earlier. Last week’s figure was the lowest number of claims since May 2007. Economists were targeting a hike in claims last week to 310,000.

The four-week moving average, regarded as a better measure of labor trends because it flattens weekly volatility, dropped by 1,000 to 322,5000. Meanwhile the one-month average from the week earlier was revised up by 250 to 323,500.

The Labor Department said that there were no special factors affecting the claims report.

Continuing claims, or the number of people already collecting benefits at the state level, declined from 2.666 million to 2.653 million in the week ended May 10. Continuing claims are reported at a one-week lag to initial claims and do not include recipients of extended or federal program benefits.

Total claims, the number of people collecting across all state and federal programs, were 2.62 million, a drop of 84,543 from 2.705 million, in the week ended May 3. Total claims come at a two-week lag to initial claims. At the same time in 2013, total claims were 4.738 million.

The largest increases in initial claims for the week ending May 10 were in Mississippi (+1,183), Georgia (+1,147) and Tennessee (+730). The largest decreases were in California (-7,651), Massachusetts (-2,316) and Pennsylvania (-1,408).

Despite the jump in claims last week, the outlook for the jobs market is improving, with firing continuing to hover at multi-year lows and hiring accelerating last month. The Labor Department reported early in May that the U.S. created a robust 288,000 jobs in April and the unemployment rate shrunk to 6.3 percent, the lowest level since September 2008.

There was no shortage of fear that the unseasonably snowy and icy winter stalled economic growth in the first quarter, likely scaring businesses from hiring, but the sharp climb last month provided confirmation that the economy is getting back on track. Over the past three months, an average of 238,000 have been created monthly, up from only 167,000 in the prior three months.

The markets aren’t giving much reaction to the jobs figure with futures holding essential were they were when the report hit at 8:30. It looks like the markets are going to open flat to modestly ahead, with Dow futures up by 12 points a half-hour ahead of the bell.