Economy looks better despite jobless jump

WASHINGTON -- Despite persistent layoffs, the economy seems to be faring better than it was 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 some signs of recovering from the longest recession since World War II.

A revised reading on 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 think the economy is shrinking at a slower pace -- about 2 percent -- in the current quarter.

The main forces behind the small upgrade in the first quarter: Businesses didn't cut stockpiles of goods as much, and imports dropped more sharply than previously estimated.

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 benefits rose by 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 unemployment insurance claims, which reflects the level of layoffs, to decline slowly in coming months as the recession bottoms out.

The number of people continuing to receive unemployment aid remains below the peak of 6.8 million reached May 30. That means that job losses are likely slowing, economists said.