New claims for jobless benefits up sharply

WASHINGTON – The number of people filing new claims for jobless benefits jumped last week after three straight declines, another sign that the pace of layoffs has not slowed.

Initial claims for jobless benefits rose by 12,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. It was the highest level in a month and overshadowed a report that showed consumer prices remain essentially flat.

The rise in jobless claims highlighted concerns about the economic rebound – especially after a report earlier this week said home construction plunged in May after government tax credits expired.

If layoffs persist, there’s a concern that the June employment numbers may show a decline in private-sector jobs after five straight months of gains, said Jennifer Lee, an economist with BMO Capital Markets.

“We’ve definitely seen the economic recovery hit a wall,” Lee said.

First-time jobless claims have hovered near 450,000 since the beginning of the year after falling steadily in the second half of 2009. That has raised concerns that hiring is lackluster and could slow the recovery.

The four-week average for unemployment claims, which smoothes volatility, dipped slightly to 463,500. That’s down by 3,750 from the start of January.

Kevin Logan, an economist with HSBC Securities, said many economists have been expecting claims to fall below 450,000 for several weeks now.

“The wait is getting longer and longer,” said Logan. “As each week goes by, doubts about the underlying strength of the economic expansion grow.”

A separate Labor report said consumer prices fell for the second straight month. The 0.2 decline in the Consumer Price Index was pulled down by falling energy prices – most notably a 5.2 percent drop in gasoline prices.