By Greg Robb, MarketWatch WASHINGTON (MarketWatch) — The number of people who applied for unemployment benefits rose slightly last week, only partially reversing a sharp decline two weeks ago, U.S. data showed Thursday. Initial jobless claims in the week ended Oct. 1 increased by 6,000 to a seasonally adjusted 401,000, the Labor Department said. The increase was smaller than expected. Economists surveyed by MarketWatch had expected new applications to rise to 410,000. Claims in the week ended Sept. 24 fell 33,000 to a total of 395,000, revised from an initial estimate of a drop of 37,000 for the week. Economists said that large drop was caused by seasonal adjustment issues as well as the tailing off of hurricane-related activity. A Labor Department official said that no special factors impacted the latest claims data. There used to be an old rule of thumb that claims above 400,000 signaled recession, but economist Michelle Girard said that this is no longer valid and that no alternative threshold has emerged. Economists are watching claims closely as any sustained uptrend from current levels would be an early-warning signal of renewed contraction in the economy, said Girard, senior economist at RBS Securities Inc., in a note to clients. The average of new claims over the last four weeks, viewed as a more accurate gauge of employment trends, fell by 4,000 to 414,000, the lowest level since late August. On Friday, the government will release the monthly employment report for September. Economists think the U.S. added 59,000 jobs to nonfarm payrolls after a flat reading in August. Still, the economy remains weak, and hiring by historical standards is very slow at the current stage of recovery. The U.S. needs to add at least 125,000 jobs a month just to keep up with the growth of the labor force — and double that amount to drive down the nation’s unemployment rate, which stood at 9.1% for August. The chance that hiring will sharply accelerate in the near future, however, appears low. Slower consumer spending, plunging stock markets and worries about excessive debt in the U.S. and Europe have spurred many companies to reevaluate hiring plans. On Tuesday, Federal Reserve Board Chairman Ben Bernanke said that the recovery was close to faltering and that he didn’t see any hints in the economic data of improvement in the labor market. Bernanke also recently called the weak labor market a “national crisis.” Meanwhile, the Labor Department also said the number of people who continued to receive state unemployment checks decreased by 52,000, to 3.7 million, in the week of Sept. 24. Continuing claims are reported with a one-week lag. This is the lowest level since July 30. A total of 6.86 million people received some kind of government benefit in the week ended Sept, 24. That was down more than 123,000 from the prior week. Greg Robb is a senior reporter for MarketWatch in Washington.

Source