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Jobless claims grow to 8-month high

by Adam Russett on May 5, 2011

While economists have been touting lower unemployment rates as hopeful signs for the economy, a surprising uptick in jobless claims has caused stocks to tumble and the value of the dollar to rise. Some experts speculate that the numbers could be distorted due to spring layoffs and holidays. 

"The Labor Department doesn't come out and say we messed up our seasonal factor adjustments, but they did. Their way of putting it is the claims were tied to spring break layoffs in New York. Why did we have that? Because spring break was later because of the floating nature of the Easter holiday," economist Michael Strauss told Reuters. "Is it going to affect payrolls number? No."

Investment strategist Bob Andres struck a different tone, explaining to the publication that he thought that the Fed and the markets had both been too "optimistic" about the recovery, which he expects to take a much longer time.

However, this may be a temporary setback. While job creation has slowed, CNBC reports that layoffs have started to fall. That provides some relief for those who are concerned that there could be another massive wave of unemployment, but experts agree that overall hiring rates must increase.

"It hasn't picked up, and job increases at this pace are not sufficient to drive the unemployment rate lower aggressively," Joel Prakken, chairman of Macroeconomic Advisors, told CNBC. "In order for the labor market to continue improving we really need to see stronger numbers than this in the months ahead."

Overall, claims for unemployment rose from 431,000 last week to 474,000, an increase of 43,000. The four-week moving average of unemployment rose by 22,250 to 431,250.  

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