The number of Americans filing initial claims for jobless aid climbed a surprising 30,000 last week, the biggest jump in over a year, according to government data on Thursday that economists took with a grain of salt. A separate report showed factory activity in New York state improved markedly in early April. First-time claims for state unemployment benefits climbed to 360,000 in the week ended April 10, their highest level since early February, from a revised 330,000 in the prior week, the Labor Department said. The increase in initial claims was the largest weekly rise since December 2002. Wall Street economists had expected claims to rise to only 335,000 from the more than three-year low reached in the previous week. Prices for U.S. government bonds rallied, sending market interest rates higher, in the moments after the reports were released, but soon trimmed gains. The dollar weakened. A Labor Department analyst cautioned that the first full week of April was "pretty unpredictable" for jobless claims and difficult to adjust for seasonal variations. Still, he said there were no special factors to explain the jump.
NOISE?
Economists on Wall Street also said the data should be viewed with some skepticism. "We need to see what next week gives us to see if this could be noise as opposed to the start of a trend," said Kathleen Stephansen, an economist with Credit Suisse First Boston in New York. Analysts said claims are often volatile at the start of a quarter and could be especially so in early April, in part because of the Easter holiday. A four-week average of initial claims, which irons out weekly volatility, moved up by 6,750 to 344,250 -- a level economists normally associate with rising employment. The department said earlier this month that U.S. employers added 308,000 workers to their payrolls in March, the biggest increase in four years. The jump in employment came as welcome news for an economy that had been mired in a sluggish job recovery and helped fuel expectations interest rates would soon head higher. In the claims report, the department said the number of people on the benefit rolls who had already received an initial week of aid dropped 22,000 last week to 2.98 million, the lowest level since July 2001. The decline in so-called continued claims could signal improved job prospects, but may also reflect workers falling off the rolls as benefits expire.
FACTORY REVIVAL
The report on New York factory activity, issued by the New York Federal Reserve Bank, showed an early-April gain that more than reversed a slowdown the month before. The two-year-old Empire Manufacturing Survey's business conditions index rose to 36.05 in April from 25.33 in March, moving back toward February's record high of 42.05. "Price indexes continued their upward climb to reach new highs, and employment indexes increased markedly, indicating an expansion in hiring activity," the New York Fed said. The prices paid index rose to a record high of 56.19 in April from 50.00 in March. The prices received component ticked up only slightly to 12.38 from 11.76, suggesting profit margins were being squeezed. The number of employees index reversed its recent decline, jumping to 19.83 in April from 9.72 in March, the Fed said. The average workweek index remained volatile, almost doubling to 22.24 from 11.86 in March. The new orders index rose to 31.63 in April from 23.52 the month before, while shipments leapt to 41.59 from 26.25.///