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People wait in line to enter the NYCHires Job Fair in New York in this file photo. (© Shannon Stapleton / Reuters/REUTERS)
People wait in line to enter the NYCHires Job Fair in New York in this file photo. (© Shannon Stapleton / Reuters/REUTERS)

U.S. jobless claims rise but trend still encouraging Add to ...

The number of Americans filing for jobless benefits unexpectedly rose last week, but not enough to change perceptions that the labor market was strengthening.

Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 362,000, the Labor Department said on Thursday.

Even with the increase, claims are still near their lowest in four years, and have dropped about 40,000 since the beginning of the year. The four-week moving average, considered a better measure of labor market trends, edged up 250 to 355,000.

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Payrolls data on Friday is expected to show steady job creation and further reduce chances of extra stimulus measures from the Federal Reserve at its meeting next week.

Economists who had expected claims to hold at 351,000, shrugged off the rise, which marked three straight weeks of small gains since breaching a four-year low in mid-February.

“You are bound to get some uptick even when the overall trend is downward. The labor market is improving, but it’s still quite impaired,” said Paul Edelstein, an economist at IHS Global Insight in Lexington, Massachusetts.

The government is expected to report on Friday that the economy created 210,000 new jobs last month, according to a Reuters survey, adding to January’s tally of 243,000.

That would mark three consecutive months of nonfarm payrolls growth above 200,000. The unemployment rate is seen holding at a three-year low of 8.3 per cent in February.

Data on Wednesday showed private employers stepped up hiring in February. That improving labor market tone was reinforced by a separate report on Thursday showing planned layoffs at U.S. companies declined 3.3 per cent in February.

The claims data had little impact on U.S. financial markets, with traders taking their cue from developments on the Greek debt issue and comments from European Central Bank President Mario Draghi.

Last week, the four-week moving average for new claims, considered a better measure of labour market trends, edged up 250 to 355,000. However, the measure remained near a four-year low.

The economy has added 917,000 jobs since September, a surprisingly strong figure given that the economy has not been robust. The gains have been at the cost of productivity. As companies have added new workers, the amount of output workers produce per hour has slowed.

“One of the primary reasons that the labor market appears to have gone from an underlying 125,000 payroll increase to 175,000 is that productivity growth has slowed sharply,” said Steven Ricchiuto, chief economist at Mizuho Securities in New York.

Productivity grew at a 0.9 per cent annual rate in the fourth quarter slowing from a 1.8 per cent pace the prior period. Hourly output per worker has slowed sharply from a peak of 8.3 per cent shortly after the 2007-09 recession ended.

Despite significant job gains, the recovery in the labor market remains painfully slow. The number of people still receiving benefits under regular state programs after an initial week of aid rose in the week ended Feb. 25.

In January, about 43 per cent of the 12.8 million unemployed Americans had been out of work for more than 6 months, a major cause of concern for the Federal Reserve. Policymakers now appear to be in a wait and see mode, neither ready to launch another round of bond buying nor ease off extraordinary support for the recovery.

Moreover, 23.8 million people are either out of work or underemployed and there are no job openings for nearly three out of every four unemployed people.

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