Rising US layoffs hint at ebbing labor market momentum

The number of Americans filing for unemployment benefits rose more than expected last week, suggesting some loss of momentum in the labor market amid a sharp economic slowdown and stock market selloff.

Signs of creeping employment weakness were also flagged by another report on Thursday showing a 218 percent jump in announced job cuts by U.S.-based employers in January. The planned layoffs were concentrated in the energy and retail sectors.

"The future is somewhat darker ... the labor market may be past its peak for this cycle. It looks like the labor market has scaled back its rapid advance last month," said Chris Rupkey, chief economist at MUFG Union Bank in New York.

Initial claims for state unemployment benefits increased 8,000 to a seasonally adjusted 285,000 for the week ended Jan. 30, the Labor Department said. Claims remained below 300,000, a level associated with strong labor market conditions, for a 48th straight week - that is the longest run since the early 1970s.

The four- week moving average of claims, considered a better measure of labor market trends as it irons out week- to- week volatility, rose 2,000 to 284,750 last week. Economists had forecast claims rising to 280,000 in the latest week.

The rise in layoffs came amid a slowdown in economic growth. The economy grew at only a 0.7 percent annual pace in the fourth quarter, held back by the headwinds of a strong dollar and faltering global demand.

A downturn in capital spending by energy companies, reeling from a collapse in oil prices, and inventory destocking by businesses are also constraining growth. At the same time, a stock market rout sparked by fears of a global economic slump has caused financial market conditions to tighten.

In a separate report, global outplacement consultancy Challenger, Gray & Christmas said employers reported 75,114 planned job cuts last month, up from December's 15-year low of 23,622. January's planned layoffs were the largest since July.

Retailers announced plans to eliminate 22,246 jobs from their payrolls, the most since January 2009. The retail cuts were dominated by Walmart , which announced plans to close 269 stores worldwide. Firms in the downtrodden energy sector plan to slash headcount by 20,246, up from 1,682 in December.

Some economists downplayed the increase in layoffs, citing the ongoing job losses in the energy industry and the impact of a blizzard that buried the northeastern United States in late January. They also tied the rise to the dismissal of seasonal and temporary workers after the holiday shopping season.

"To date, even taking the recent rise as given, the increase (in claims) is not sufficient to change our view that the expansion remains intact and that the economy is far from recession. Claims are very volatile," said Rob Martin, an economist at Barclays in New York.

In a third report, the Commerce Department said new orders for manufactured goods tumbled 2.9 percent in December, the largest drop in a year, after falling 0.7 percent in November.

The reports came on the heels of weak data on export growth and consumer spending that suggest the Federal Reserve will probably not raise interest rates in March. The U.S. central bank raised its short- term interest rate in December for the first time in nearly a decade.

The dollar fell to a more than 3-1/2month low against a basket of currencies as investors further dialed back their rate hike expectations. Prices for U.S. government debt rose, while U.S. stocks were mixed in volatile trading.

While the claims data has no bearing on January's employment report, which is scheduled to be released on Friday, as it falls outside the survey period, it fits in with perceptions of a deceleration in the pace of job growth.

According to a survey of economists, nonfarm payrolls are expected to have increased 190,000 last month after surging by 292,000 in December. The unemployment rate is forecast holding steady at a 7-1/2-year low of 5 percent.

In another report on Thursday, the Labor Department said nonfarm productivity, which measures hourly output per worker, fell at a 3.0 percent rate in the fourth quarter, the biggest drop in more than a year, after rising at a 2.1 percent rate in the third quarter.