June 9 (Bloomberg) -- U.S. initial jobless claims unexpectedly rose last week, a sign that the labor market is struggling to gain traction.
Jobless claims increased by 1,000 to 427,000 in the week ended June 4, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected a drop in claims to 419,000, according to the median forecast. The number of people on unemployment benefit rolls and those receiving extended payments decreased.
Some employers are cutting staff as demand slows because of elevated energy prices, falling house prices and tight credit. The economy generated the fewest jobs in May in eight months and the unemployment rate rose, a report showed last week.
“The labor market is obviously struggling,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, said before the report. “I expect claims to stabilize and eventually come down.”
It was the ninth consecutive week that claims were above 400,000. They reached a two-year low of 375,000 in February.
The median forecast was based on a survey of 49 economists. Estimates ranged from 400,000 to 430,000. The Labor Department revised the prior week’s figure to 426,000 from the 422,000 initially reported.
Payrolls grew by 54,000 workers last month after increasing by 232,000 in April, Labor Department data showed last week. The jobless rate rose to 9.1 percent from 9 percent.
Economists at Barclays Capital Inc. last week cut their forecast for the year to 2.5 percent growth from a prior estimate of 3.1 percent at the beginning of the year.
Housing prices in 20 major cities dropped in March to the lowest level since 2003, according to data from S&P/Case Shiller released last month. Declining home values weigh on consumer confidence and curb the household spending that makes up 70 percent of the economy.
Prices for regular gasoline that rose as high as $3.99 in early May also hurt confidence and spending, likely leading to less hiring. Those prices have since come down more than 20 cents, which may provide some relief.
Today’s data showed the four-week moving average, a less volatile measure than the weekly figures, fell to 424,000 last week from 426,750.
The number of people continuing to receive jobless benefits fell by 71,000 in the week ended May 28 to 3.68 million.
The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 52,100 to 3.99 million in the week ended May 21.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 2.9 percent from 3 percent, today’s report showed.
Twenty-six states and territories reported an increase in claims, while 27 reported a decrease. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Some employers are still considering possible cuts to their workforce.
Morgan Stanley, owner of the world’s largest brokerage, may eliminate more jobs at its wealth management unit as Barclays Capital cuts positions in its equities division worldwide.
“As we continue to take actions to improve broker efficiency we may reduce our broker headcount below previously announced targets,” Morgan Stanley Chief Financial Officer Ruth Porat said at the Deutsche Bank Global Financial Services Conference on June 7. The unit, which had about 17,800 employees at the end of March, was previously aiming to reduce that figure to as little as 17,500, according to a spokesman for the bank. The firm cut 300 brokers at the division in the first quarter.
Barclays Capital, the investment-banking unit of London- based Barclays Plc, cut as many as 50 jobs in its equities unit, a person familiar with the matter said.
General Motors Co. and Ford Motor Co. may enter contract talks with the United Auto Workers this year seeking to close as many as six assembly plants to boost profit while the union tries to save jobs amid an industry recovery.
Kim Carpenter, a GM spokeswoman, said last month the company hasn’t decided how many plants it may close and what savings might result. Ford, which intends to close a plant in Minnesota late this year, also may choose to shutter Michigan and Ohio plants making slow-selling vehicles, industry researchers said.
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