Initial jobless claims in last week rise above 400,000 again

Reporting from Washington —  The number of Americans who applied for jobless benefits in the last week rose above 400,000 again, an indication that the pace of hiring in the U.S. probably remains modest at best.

Initial claims for unemployment compensation climbed 6,000 to a seasonally adjusted 402,000, the Labor Department said Thursday. It was the highest level in a month.

Applications from two weeks ago were revised up to 396,000 from an original reading of 393,000. Economists surveyed by MarketWatch had expected new requests for jobless benefits to total 393,000 in the week ended Nov. 26, which included the Thanksgiving holiday.

The average of new claims over the last four weeks, meanwhile, rose 500 to 395,750. The monthly average is seen as a more accurate gauge of labor trends because it reduces volatility in the week-to-week data.

Economists generally believe that it’s a sign of stronger job creation and economic growth when claims fall below the 400,000 threshold. Although the claims data directly reflect people who lose their jobs, the number of claims declines when hiring outpaces layoffs.

Since late April, claims have gradually fallen from a 2011 high of 478,000 to around the 400,000 mark.

“The downward drift in claims below 400,000 is consistent with ongoing moderate growth in non-farm payroll employment,” economist Yelena Shulyatyeva of BNP Paribas said.

Yet the failure of claims to drop even faster suggests that companies remain cautious about hiring new staff. The economy has added an average of 125,000 jobs each month over the last year, but that’s barely enough to keep up with natural growth in the labor force.

Economists say the U.S. would have to average 250,000 new jobs a month for several years to bring the jobless rate back down to the pre-recession level of around 6%. The unemployment rate now stands at 9.0%.

The next monthly jobs report comes out Friday. The MarketWatch survey forecasts an increase of 125,000 jobs in November, up from an initially reported gain of 80,000 jobs in October. Yet if recent trends hold, the October employment numbers could be revised sharply higher.

In a separate report Thursday, the Institute for Supply Management said its survey of manufacturing executives showed an increase in activity in November. The ISM said its index rose to 52.7% from 50.8%, though the employment component fell slightly.

Bartash writes for MarketWatch.com/McClatchy.