Jobless Claims See Unexpected Rise

State agencies processed a backlog of jobless claims last week that had accumulated due to the snowstorms across the nation, causing an unexpected spike in the number of new claims for unemployment benefits.

The severe weather also caused a jump in the number of temporary layoffs as the conditions impacted the construction and transportation industries.

The Labor Department reported an increase of 22,000 to a seasonally adjusted rate of 496,000 for initial jobless claims in January, while analysts were expecting a drop to 455,000.

The weekly gauge of the pace of layoffs is closely watched by Wall Street as it is an indication of the willingness of employers to hire new workers.

In a less volatile gauge on the state of unemployment, the four-week average of claims rose by 6,000 to 473,750 last week. The four-week average has jumped by 30,000 in the past month, after falling sharply from its peak last spring from about 650,000.

Economists note that a four-week level of 425,000 would signal net hiring, and the higher claims in recent weeks indicates that the unemployment rate, which currently sits at 9.7 percent, will rise. The Labor Department is set to issue the February employment report next week.

The number of people that are continuing to claim unemployment benefits was unchanged at 4.6 million. The continuing claims data comes in one week behind that for initial claims.

The Fed has recently said that it expects the unemployment rate to remain in the range of 9.5 percent to 9.7 percent for the remainder of the year.

While the economy has grown for the past six months, jobs have yet to germinate. The economic recession has caused 8.4 million jobs to be shed in the U.S.