Jobless claims jump to three-month high

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The New Economy

Jobless claims jump to three-month high

Jobless claims suggest that the US economy isn't adding jobs fast enough.

Rick Bowmer/AP/File

In this July 20 file photo, Mike Watson (left), a business employment specialist works with Daniel Holm while job searching at WorkSource Oregon, in Portland, Ore. Initial requests for jobless benefits rose last week to their highest level since April, a sign that hiring remains weak and some companies are still cutting workers.

By Laurent Belsie

Aug. 05, 2010, 1:20 p.m. ET

Claims for unemployment benefits jumped unexpectedly to a three-month high, the latest hint that job growth in the United States is not proceeding as planned.

As the boost from government stimulus faded, the private sector was supposed to pick up steam and employ new workers. Instead, businesses are hiring at such a disappointingly sluggish pace that the unemployment rate is likely to remain high for some time to come.

Friday's unemployment report for July will offer the clearest picture of the labor market. So far, the evidence isn't encouraging:

鈥he number of workers filing claims for first-time unemployment benefits jumped to 479,000, up an unexpected 19,000 from the previous week and the highest overall level since April, the Department of Labor Thursday. That suggests an ongoing elevated level of layoffs.

鈥he private sector only added 42,000 jobs in July, barely above the average gain for the past six months and with no sign of an acceleration, according to the released Wednesday.

The positive news is that the economy is still expanding. The challenge is that anemic job growth will make it hard to absorb the number of new workers entering the labor force, much less hire back those who have spent so much time unemployed, economists say.