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U.S. jobless claims higher
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May 31, 2001: 9:34 a.m. ET
Weekly claims pass forecasts; continuing claims highest since 1994
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NEW YORK (CNNfn) - New jobless claims rose for the third straight week in the United States last week, the government said Thursday, a steeper increase than economists had expected and a sign of continued weakness in the labor market.
New claims for state unemployment benefits rose to 419,000 in the week ended May 26 from a revised 411,000 the prior week, the Labor Department reported.
Analysts surveyed by Briefing.com had forecast new claims of 408,000 for last week.
The four-week moving average of new claims, considered a better gauge of jobless trends, slipped to 402,500 from the previous week's revised 404,000.
Economists watch the four-week moving average more closely because it smoothes out fluctuations in the weekly data.
Continued claims -- those workers who already have claimed at least a week of benefits – rose to about 2.85 million in the week ended May 19, the latest data available, from a revised 2.76 million the previous week. It was the highest level since Feb. 12, 1994, when continued claims reached 2.85 million.
The increase was the third in a row, an ominous reversal of the trend at the beginning of May, when claims actually fell one week.
'Not a favorable trend'
"This is not a favorable trend by any means, and it warns us of more labor market slackening, more unemployment and, with that, the possibility of a renewed slowdown in consumer spending," John Lonski, bond market analyst with Moody's Investors Service, told CNNfn's Before Hours program. "That could be the development that finally pushes the U.S. into a recession."
Investors showed little reaction and stocks edged higher in early trading on Wall Street.
Other economists found a silver lining in the four-week moving average, which fell last week and has remained relatively stable in recent weeks.
"It will likely begin moving higher over the next few weeks, but the dramatic increase seen in the first few months of this year will likely not be repeated," said Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. "Job losses are continuing, but they are no longer accelerating much, if at all."
Click here for the latest on layoffs
The data come a day before the Labor Department is scheduled to release its report on the U.S. unemployment rate in May. Unemployment jumped to 4.5 percent in April, its highest level since October 1998, as businesses cut 223,000 jobs outside the farm sector in April -- the biggest one-month drop since February 1991, at the end of the last recession.
The Federal Reserve will pay close attention to the unemployment data as it decides whether or not to cut interest rates to stimulate spending and avoid another recession. The Fed already has cut the federal funds rate, an overnight bank lending rate, five times this year from 6.5 percent to 4 percent. 
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