Layoffs, fuel prices dim outlook
Unemployment applications spike
WASHINGTON — A renewed rise in layoffs is the latest sign that higher fuel prices may be slowing the economy.
A 23 percent spike in applications for unemployment benefits over the past month suggests that hiring may look weaker when the government issues the April jobs report today.
Most analysts agree the economy has strengthened enough to keep growing this year. But gas prices have risen for 44 straight days. Consumers are spending more to fill the tanks, leaving them with less to spend elsewhere. As a result, many companies are feeling less certain about the economy’s health and could delay hiring plans.
“We have found that higher gas prices can lead to a slowdown in the pace of hiring,’’ said Daniel Silver, an economist at JPMorgan Chase.
Applications rose last week to a seasonally adjusted 474,000, an eight-month high. A Labor Department spokesman said the spike was largely the result of unusual factors, including a high number of school systems in New York that closed for spring break.
Still, applications have risen by nearly 100,000 from February’s three-year low of 375,000 — a figure typically consistent with sustainable job growth.
Most economists are sticking with their prediction for today’s employment report. The consensus view is the economy added 185,000 jobs in April and that the unemployment rate was unchanged at 8.8 percent. But the weaker data on layoffs and other recent reports have stirred concerns that the gains could shrink in the coming months.
The US service sector grew last month at the slowest pace since August, according to a report this week from a private trade group. The National Federation of Independent Business said yesterday that nearly twice as many firms cut jobs in April as added workers.
US companies squeezed more work out of their staffs in the first three months of the year, according to a separate Labor Department report. But the overall gain in productivity was much slower than in the previous three months.
A slowdown in productivity growth is bad for the economy if it persists for a long period. But it can be good in the short term when unemployment is high because it signals companies must hire more workers in order to make further gains.