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US jobless claims rise and planned layoffs surge

Initial claims for US unemployment benefits rose to a seasonally adjusted 274,000 for the week ended April 30
Initial claims for US unemployment benefits rose to a seasonally adjusted 274,000 for the week ended April 30

The number of Americans filing for unemployment benefits rose more than expected last week, posting the biggest gain in more than a year,

However the underlying trend continued to point to a strengthening US labour market. 

Another report from today showed a 35% surge in planned layoffs by US-based employers last month. 

Most of the announced job cuts were concentrated in the energy sector, which is reeling from low oil prices that have hurt profits. 

Initial claims for state unemployment benefits increased 17,000 to a seasonally adjusted 274,000 for the week ended April 30, the Labor Department said. Last week's increase was the largest since February of last year.  

Economists polled by Reuters had forecast initial claims rising to 260,000 in the latest week. 

Jobless claims have now been below 300,000, a threshold associated with healthy labour market conditions, for 61 consecutive weeks, the longest stretch since 1973. 

The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, rose 2,000 to 258,000 last week. 

The latest claims data has no bearing on April's employment report as it falls outside the survey period. 

Claims were generally low in April compared to March. That points to a fairly robust employment market despite a report yesterday showing hiring by employers in the private sector last month was the weakest in three years. 

Though the ADP National Employment Report showed a slowdown in services industry hiring last month, an Institute for Supply Management survey showed employment in the services sector increased in April for a second month in a row. 

Meanwhile, global outplacement firm Challenger, Gray & Christmas said US-based companies announced 65,141 job cuts last month, up 35% from March. 

The energy sector announced another 19,759 job cuts in April, bringing its total layoffs this year to 72,660. They were also layoffs in the information technology and retail sectors. 

"It is not unusual to see heavy job cuts in a strong economy. Companies are constantly retooling, and sometimes the best time to do that is when the economy is strong," said John Challenger, the chief executive officer of Challenger, Gray & Christmas. 

According to a Reuters survey of economists, the Labor Department is expected to report tomorrow that non-farm payrolls increased by 202,000 jobs in April after a gain of 215,000 in March.

The unemployment rate is seen holding steady at 5% and average hourly earnings are forecast rising 0.3% for a second consecutive month.