WASHINGTON (NYSE:AP) -- The number of people filing new claims for jobless benefits jumped last week after three straight declines, another sign that the pace of layoffs has not slowed.
Initial claims for jobless benefits rose by 12,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. It was the highest level in a month and overshadowed a report that showed consumer prices remain essentially flat.
The rise in jobless claims highlighted concerns about the economic rebound -- especially after a report earlier this week said home construction plunged in May after government tax credits expired.
If layoffs persist, there's a concern that the June employment numbers may show a decline in private-sector jobs after five straight months of gains, said Jennifer Lee, an economist with BMO Capital Markets.
"We've definitely seen the economic recovery hit a wall," Lee said.
First-time jobless claims have hovered near 450,000 since the beginning of the year after falling steadily in the second half of 2009. That has raised concerns that hiring is lackluster and could slow the recovery.
The four-week average for unemployment claims, which smooths volatility, dipped slightly to 463,500. That's down by 3,750 from the start of January.
Kevin Logan, an economist with HSBC Securities, said many economists have been expecting claims to fall below 450,000 for several weeks now.
The housing index dived this month, mortgage rates are off their lows, unemployment remains high, unemployment claims which were supposedly falling spike up now and companies are started to fire again. Add in the fact that many companies are also lowering earnings expectations and we have a time bomb on our hands. While we were bullish on this market in Feb 2009, we turned cautious towards the end of 2009 for the math simply did not make sense. The Dow has not put in one new high on above average volume; this simple fact should scare the hell out of long term investors.