First-time unemployment filings head the wrong way

NEW YORK (CNNMoney) -- First-time filings for unemployment claims jumped last week, coming in above the key 400,000 level for the third straight week, according to a government report Thursday.

The number of initial claims rose to to 429,000 in the week ended Apr. 23, up 25,000 from the week before. It was the highest level in three months, and surprised economists, who were expecting initial claims to drop to 390,000 in the latest report.

"This is a major disappointment because it's another move in the wrong direction," said Tim Quinlan, economic analyst at Wells Fargo.

The 4-week moving average of initial filings-- a number that tries to smooth out week-to-week volatility -- also rose above the threshold to 408,500, up 9,250 from the previous week. The 8-week moving average, which is an even better gauge for the longer-term trend, also ticked above 400,000.

"This is more than just a misstep for the job market," Quinlan said. "It's a signal that the robust job growth we've seen recently is poised to lose momentum."

In the government's last monthly reading on the labor market, the unemployment rate fell for a fourth straight month in March to 8.8%, the lowest since March 2009, as the economy gained 216,000 jobs. The Labor Department's April job report is due at the end of next week.

Meanwhile, the number of Americans filing for ongoing claims decreased 68,000 to 3,709,000 in the week ended April 16, the latest data available. That's the lowest figure since September 2008, and below economists' estimates for 3,690,000 continuing claims.

Ongoing claims reflect people who file each week after their initial claim until the end of their standard benefits, usually after 26 weeks.

The 4-week moving average for ongoing claims fell by 22,750 to 3,697,750.

But the downward trend may not all be good news.

Quinlan said the figure could be skewed by the expiration of benefits for those Americans who have been jobless for long periods of time and are no longer eligible for unemployment insurance.

While the length of eligibility varies by state, that maximum length of time Americans can file for benefits is 99 weeks.

"We can't be certain it's a positive trend yet," Quinlan said. "The Labor Department doesn't specify whether these people are rolling off their benefits or if they've found jobs."

For healthy improvement in the job market, Quinlan said unemployment claims need to come in consistently below 400,000 and the economy needs to add between 150,000 and 200,000 jobs monthly.