Hopes for a quick decline in US joblessness dim

With the unemployment rate still a grinding 8.8 percent, an expected poor number for positions created across the country last month could put new pressure on the government to find more ways to help the jobless.

On Thursday a surprising jump in the weekly indicator on new unemployment claims sent worries through the economy, helping to push the Dow Jones Industrial Average down 1.1 percent.

New claims for unemployment insurance benefits leaped to a whopping 474,000 in the week ending April 30, a 10 percent increase from the prior week, the Labor Department reported.

The rise surprised most analysts who had forecast a decline to 400,000, and sent a shudder through the US equity and oil markets as investors fretted about a slowdown in the world\'s largest economy.

Indeed, the number has increased in three of the past four weeks, ending a steady fall in the number of new claims since August, when the economic recovery was picking up pace.

But slower GDP growth -- only 1.8 percent in the first quarter -- has translated into a disappointment for those unemployed Americans hoping for relief.

The jobless claims report is "a disaster" and foreshadows gloomy unemployment data on Friday, Jon Ogg at 24/7WallSt.com warned.

"This is markedly heading the wrong way."

"With claims now topping expectations (and the 400,000 threshold) for four straight weeks, concerns are growing that the job market is suddenly deteriorating," said Nomura Global Economics.

Analysts on average expect the Labor Department will report 185,000 nonfarm jobs were created in April, a drop of 14 percent from March, and that unemployment will be unchanged at 8.8 percent.

Nomura\'s forecast was for only 150,000 new jobs.

Analysts at Deutsche Bank were more upbeat, seeing anomalies that skewed the most recent reports; they forecast that 200,000 jobs will have been added in April.

Indeed, a Labor Department official said special factors not taken into account by seasonal adjustment could explain the sharp rise in Thursday\'s claims numbers, including the impact of a late spring break and industry layoffs due to Japan\'s quake-tsunami disaster.

Briefing.com analysts agreed.

"For the past four weeks, extraneous circumstances have caused the initial claims level to rise steadily," they said.

The spike "is not the result ... of a weaker labor market" but of poor seasonal adjustment factors.

Still, underpinning the cloudy views was the weaker-than-expected report Wednesday by payrolls firm ADP, which said the US private sector added a modest 179,000 jobs in April, well below expectations.

With federal, state and local governments cutting payrolls to try and balance budgets, the private sector is expected to pick up the slack in hiring to get the economy back on track.

But sharply slowing growth especially in the all-important services sector means that the private business job-creation engine remains in low gear.

Last week Federal Reserve chairman Ben Bernanke said unemployment continues to be a major problem and is a key reason the Fed has kept up its easy-money policy.

He voiced special concern over long-term unemployment, which he said was the worst since just after World War II.

"Currently something like 45 percent of all the unemployed have been unemployed for six months or longer," he said.

"And we know the consequences of that can be very distressing because people who are out of work for a long time, their skills tend to atrophy -- they lose contacts with the labor market, with other people working, the networks that they have built up."

The Fed forecast a slow decline in the jobless rate to between 8.4 percent and 8.7 percent by the end of the year.

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