The number of newly laid off U.S. workers filing claims for unemployment aid rose last week and sales of previously owned homes fell in March, according to data on Thursday that showed the economy still sliding downward.
First-time claims for jobless benefits rose 27,000 to 640,000 last week, the Labor Department said. In addition, the number of people still drawing benefits after an initial week of aid jumped 93,000 to a record 6.14 million in the week ended April 11.
It was the 14th straight week in which the so-called continuing claims hit an all-time high and underscored the difficulties that laid off workers were experiencing to rejoin the labor force.
While initial filings rose, analysts noted they remained below the 26-1/2 year high of 674,000 touched in late March, suggesting a moderation in the pace of economic decline. Analysts are closely watching initial claims for clues as to when the 16-month old recession might end.
That number is supportive of the argument that we are stabilizing a little bit, but it does not mean we are at a point where we're going to start recovering any time soon, said Omair Sharif, economist at RBS Greenwich Capital in Greenwich, Connecticut.
Analysts took the same view of the home sales data. Sales fell 3 percent, but still appeared to be carving out a bottom.
U.S. stocks rose, cheered by above forecast earnings from several regional banks. Investors had earlier taken a dim view of the economic data. The Dow Jones industrial ended up 70.49 points at 7,957.06, while the S&P 500 climbed 8.37 points to 851.92.
Government bond prices nudged higher, but gains were capped amid worries over an expected deluge of new debt supply to fund programs to rescue the economy and financial sector.
CLAIMS MAY HAVE PEAKED
The U.S. recession, which is on track to become the longest since the Great Depression next month, has cost more than 5 million jobs since it began in late 2007. Economists fear this toll will keep rising as businesses slash payrolls to protect profits.
The swelling jobless rolls lifted the insured unemployment rate -- which measures the percentage of the insured labor force who are jobless -- to 4.6 percent, the highest since January 1983, from 4.5 percent the previous week.
On a more positive note, the four-week average of new jobless claims, which analysts monitor to gauge underlying lay-off trends, slipped to 646,750 last from 651,000 the previous week.
Jobless claims show signs of moving toward a sideways pattern and they may have peaked, albeit at levels that suggest very large declines in payrolls, say around 600,000 (jobs) per month, said Tony Crescenzi, chief bond analyst at Miller Tabak & Co in New York. The steadying signals a slowing in the pace of decline in the economy.
Mounting job losses have eroded household incomes, already squeezed by the collapse of U.S. house prices and stocks, curtailing big purchases of items such as houses.
The National Association of Realtors said sales of previously owned homes fell to a 4.57 million unit annual rate last month from 4.71 million in February. The inventory of existing homes for sale fell 1.6 percent to 3.74 million, representing a 9.8-month supply at the current sales pace.
It appears that home sales are establishing a trough, with the low for January holding thus far through the revisions, said Michael Darda, chief economist at MKM Partners in Connecticut. We continue to believe the first quarter will mark the low for home sales, but it will take time to work off excess inventories.
The median national home price rose 4.2 percent to $175,200 from February, boosted by seasonal factors. However, prices were still down 12.4 percent from the same period a year ago.
NAR Chief Economist Lawrence Yun said the housing market, the main catalyst for the economic rout, appeared to be stabilizing, supported by first-time buyers who have been attracted by low prices and an $8,000 tax credit.
We are hoping from early summer we will get a consistent rise in home sales. If not, then the U.S. economy is in trouble, Yun told reporters.
Distressed sales made up about half of the sales reported in March, and given the end of a moratorium on foreclosures that had been put in place by many lenders, this proportion was expected to rise, said Yun.
(Additional reporting by Alister Bull)