Job claims rise; GDP drop revised

WASHINGTON - Despite persistent layoffs, the economy seems to be faring better than at the start of the year.

The Labor Department said yesterday that new jobless claims jumped unexpectedly last week. And the number of people continuing to receive unemployment aid rose more than expected.

The figures indicate that jobs remain scarce even as the economy shows signs of recovering from the longest recession since World War II.

But a revised reading on the gross domestic product - the broadest measure of the nation's output - said the economy posted a 5.5 percent annualized decline from January through March. That was slightly better than the 5.7 percent estimate made a month ago.

Economists generally say they think the economy is shrinking at a slower pace - about 2 percent - in the current quarter.

The main forces in the small upgrade in the first quarter: Businesses did not cut stockpiles of goods as much, and imports fell more sharply than previously estimated.

The Labor Department report showed that initial claims for jobless benefits rose last week by 15,000 to a seasonally adjusted 627,000. Economists had expected a drop to 600,000. Several states reported more claims than expected from teachers, cafeteria workers, and other school employees, a Labor Department analyst said.

The number of people who are continuing to receive unemployment insurance rose 29,000, to 6.74 million, slightly above analysts' estimates of 6.7 million. The four-week average of claims, which smooths out fluctuations, was largely unchanged, at 616,750.

Most economists still expect the number of initial claims for unemployment insurance, which reflects the level of layoffs, to decline slowly in coming months as the recession bottoms out.

"We still firmly believe that the underlying trends in claims is downward, but it is slow and uneven," Ian Shepherdson, chief U.S. economist for High Frequency Economics Ltd., wrote in a client note.