WASHINGTON (AP) – The number of people applying for unemployment benefits rose sharply last week, but the figures were largely distorted by rare snowstorms that swept through the Southeast.
Applications surged last week by a seasonally adjusted 51,000 to 454,000, the highest level since late October, the Labor Department said Thursday.
A government analyst said that a major reason for the spike was the harsh weather in Alabama, Georgia, North Carolina and South Carolina. That forced many companies to shut down temporarily and also prevented many people from applying for benefits in the previous week.
When state offices, which had closed, reopened and people were able to file applications that pushed the number of requests up sharply, the analyst said.
The four southern states reported a large increases in the number of requests for unemployment benefits. Trucking companies, delivery firms, construction companies and others were affected.
Applications had been declining steadily for several weeks. Requests for unemployment benefits fell sharply in the previous week to 403,000.
Many economists consider data in January less reliable because of seasonal fluctuations.
Applications below 425,000 tend to signal modest job growth. But they would need to dip consistently to 375,000 or below to indicate a significant decline in the unemployment rate.
The four-week average, a less volatile measure, also rose last week by 15,750 to 428,750.
The average had hit a two-year low of 411,250 on Jan. 1. That had suggested companies – operating with lean work forces – may need to add more workers as the economy gains momentum.
Even with last week's increase, economists are optimistic that layoffs will slow and that hiring will pick up this year.
"We expect claims to drop next week, and we then anticipate further declines as the return of bank credit to small firms allows them to ease off on the pace of layoffs," said Ian Shepherdson, an economist at High Frequency Economics.
Employers will create a net total of 2.2 million jobs in 2011, according to a new AP Economy Survey. That would be double the number generated last year. The economists predict consumers will spend more, allowing the economy to grow at a faster clip of 3.2 percent this year.
Yet the economy would need to grow faster – closer to 5 percent for a full year to reduce unemployment by one percentage point. The nation's unemployment rate now stands at 9.4 percent. By the end of this year, it is expected to slip to 8.9 percent, according to the AP survey.
Thursday's Labor Department report also showed that number of people on the unemployment benefit rolls increased by 94,000 to 3.99 million in the week ended Jan. 15. That data is one week behind the figures for benefit applications.
It doesn't include millions more unemployed people who are receiving benefits under emergency federal programs enacted during the recession. Roughly 4.6 million people received aid under the extended benefit programs. Those program provide benefits for up to 99 weeks in states with the highest unemployment rates.
Overall, some 9.4 million people are receiving unemployment benefits.
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