Initial claims for unemployment increased 12,000 last week to 500,000, according to the Labor Department. This is the fourth straight increase in the last five weeks. The four-week average increased 8,000 to 482,500, the highest since December. Jobless claims decreased steadily after a peak of 651,000 in March 2009 as the economy began to recover, but after flattening out earlier this year, claims have begun to grow again. “This is obviously a disappointing number that shows ongoing weakness in the job market,” said Robert Dye, senior economist at the PNC Financial Services Group. The increase shows that the economy is creating even fewer jobs now than in the first half of this year. The jobless rate has been stuck at 9.5 percent for two months. The Labor department also announced that the number of people continuing to receive benefits fell by 13,000 to 4.5 million (continuing claims data lags initial claims by one week). However, that doesn’t include people receiving extended unemployment insurance which is paid for by the federal government. During the week ending July 31, the latest data available, 5.6 million unemployed workers were on the extended unemployment benefit rolls which is an increase of about 300,000 from the previous week.
During the recession, Congress added up to 73 extra weeks of benefits on top of the 26 weeks customarily provided by the states. The number of people on the extended rolls has increased sharply after Congress renewed the extended program in July after it had expired in June. Private employers added 71,000 jobs in July, but there was a loss of 202,000 government jobs, including 143,000 temporary census positions. July marked the third straight month that the private sector hired cautiously. Economists are concerned that the slow economic growth will cause the unemployment rate to rise again. In a healthy economy, jobless claims usually drop below 400,000. However, recent increases in claims provide further evidence that the economy is slowing and may slip back into a recession. Many analysts are worried that economic growth will ebb further in the second half of this year.