U.S. unemployment aid applications jump to 385,000

WASHINGTON (AP) -- The number of Americans seeking unemployment aid rose last week by 28,000, the third straight increase.

Weekly applications increased to a seasonally adjusted 385,000, the Labor Department said Thursday. That's the highest level since late November. The gain pushed the four-week average, a less volatile measure, to 354,250.

A Labor Department spokesman says the figures may have been affected by the Easter holiday. The department says the holiday's timing varies from year to year, which makes it difficult to adjust for school closings and other seasonal factors that can alter the data.

Applications are a proxy for layoffs. They have declined steadily since November, pushing the average to a five-year low three weeks ago.

The recent increases could be a sign that companies are starting to cut jobs, possibly because of steep government spending cuts that began on March 1. Earlier reports this week suggested that companies may have slowed hiring this month after four months of strong job growth.

Economists said they wanted to see more data before concluding the job market's trajectory had changed.

``We suspect the surge in the last two weeks reflects seasonal adjustment problems more than any fundamental change in the trend, but of course that remains to be seen,'' said Jim O'Sullivan, chief U.S. economist at High Frequency Economics, in a note to clients.

The government will issue the March employment report Friday. Economists forecast that it will show employers added 195,000 jobs last month, a healthy figure but below February's total of 236,000.

Job growth has picked up in recent months. Employers added an average of 200,000 jobs per month from November through February. That's nearly double the average from last spring. The gains helped lower the unemployment rate in February to a four-year low of 7.7 percent.

Stronger economic growth this year has spurred more hiring. A steady housing recovery has boosted home construction and prices. Higher home prices make Americans feel wealthier, which can spur more spending.

In February, consumer spending rose by the most in five months. And consumer confidence improved in March from the previous month, according to a survey released last week by the University of Michigan.

Two reports Wednesday, however, suggested companies may have grown more cautious last month. Services companies grew in March but at a slower pace than in February, according to the Institute for Supply Management, a trade group. Service firms, which include retailers, hotels, restaurants and financial companies, cut back on hiring and a measure of new orders fell.

And private employers added fewer jobs in March compared with February, according to payroll processor ADP. Construction firms didn't add any positions after three months of strong gains.

Several economists lowered their forecasts for hiring in March after Wednesday's reports. Still, many analysts cautioned that the ADP is not always an accurate predictor of the government's more comprehensive figures.

Nearly 5.3 million people received unemployment aid in the week ended March 16, the latest data available. That's about 170,000 fewer than the previous week.