WASHINGTON – The number of Americans seeking unemployment benefits rose last week to a five-week high, evidence that the job market remains sluggish.
The Labor Department said Thursday that weekly applications for unemployment aid rose 10,000 to a seasonally adjusted 383,000. The four-week average, a less volatile measure, increased for the first time in a month to 374,500.
Economists were disappointed by the data, particularly when coupled with a separate report Thursday that showed only modest hiring by private businesses in May. On Friday, the government will report on May hiring by private and public employers.
"The jobs data were not reassuring ahead of tomorrow's ... report," said Jennifer Lee, an economist at BMO Capital Markets.
Applications had declined to roughly 370,000 for four weeks. That drop suggested that hiring could pick up in May. When applications drop below 375,000, it typically suggests that hiring is strong enough to reduce the unemployment rate.
Thursday's data doesn't figure into the May employment report, to be released Friday. That report is based on figures gathered in the middle of the month. Analysts expect it will show that employers added 158,000 jobs, while the unemployment rate remained 8.1 percent.
That would be an improvement from April, when employers added only 115,000 jobs. But it would be slower than the blistering pace set this winter, when the economy generated an average of 252,000 jobs a month from December-February.
The number of people receiving benefits fell, partly because extended benefits programs are ending in many states. About 6.1 million people received benefits in the week that ended May 12. That's down 30,750 from the previous week.
Separately, a private survey showed that businesses boosted hiring only slightly in May. Payroll provider ADP says businesses added 133,000 jobs. That's slightly better than the revised total of 113,000 jobs it reported for April, which was the weakest in seven months. The report covers only hiring in the private sector; it excludes government jobs.
The unemployment rate has fallen from 9.1 percent in August to 8.1 percent last month. Part of the reason for the drop is that employers added 1.5 million jobs during that time. But it has also declined because some people gave up looking for work. The government counts people as unemployed only if they're actively looking for a job.
Economists have cautioned that a warm winter led companies to move up some hiring and accelerate other activity that normally wouldn't occur until spring. That gave the appearance that the economy had strengthened in January and February and weakened in early spring.
Recent economic indicators, meanwhile, have been mixed.
Consumer confidence fell sharply in May to its lowest level since January, the Conference Board said Tuesday. Americans were more worried about jobs, housing and the stock market. Lower confidence could lead consumers to cut back on their spending.
But that survey contrasted with a report, released Friday, by Thomson Reuters/University of Michigan that found consumer sentiment rose to its highest level in four and a half years.
Economists said the difference between the two is partly explained by timing. The Conference Board's survey was completed by May 16, just before stock prices leveled off after falling steadily. Gas prices also fell further after the survey was completed. The University of Michigan's report continued until later in the month and would have captured both of those trends.
There are signs the housing market is slowly improving. Home prices rose in March from the previous month in most major U.S. cities for the first time in seven months, according to the Standard & Poor's/Case-Shiller home price index. Prices rose in 12 of the 20 cities it tracks. Some of the increase was due to the start of the spring home selling season. The month-to-month price changes aren't seasonally adjusted.
In April, sales of both previously occupied homes and new homes rose near two-year highs. Builders are gaining more confidence in the market as traffic from potential buyers rises, according to an industry survey.
Building permits have risen in recent months, though they fell in April from nearly a two-year high, the National Association of Realtors said Wednesday.
Long-term mortgage rates have never been lower. The average rate on the 30-year fixed mortgage fell to 3.78 percent last week, the lowest since long-term rates began in the 1950s.
Still, the pace of home sales remains well below healthy levels. Economists say it could be years before the market is fully healed.