Rise in gas prices, layoffs clouds hopes for hiring

Associated Press

WASHINGTON

A renewed rise in layoffs is the latest sign that higher fuel prices may be slowing the economy.

A 23 percent spike in applications for unemployment benefits over the past month suggests that hiring may look weaker when the government issues the April jobs report today.

Most analysts agree the economy has strengthened enough to keep growing this year. But gas prices have risen for 44-straight days. Consumers are spending more to fill their tanks, leaving them with less to spend elsewhere. As a result, many companies are feeling less certain about the economy’s health and could delay hiring plans.

Applications rose last week to a seasonally adjusted 474,000, an eight-month high. A Labor Department spokesman said the spike largely was the result of unusual factors, including a high number of school systems in New York that closed for spring break.

Still, the level of applications is nearly 100,000 higher from February’s three-year low of 375,000 — a figure typically consistent with sustainable job growth.

The third rise in four weeks also contributed to a sell-off on Wall Street. The Dow Jones industrial average fell 139 points to close down at 12,584 for the day, although the decline also was influenced by a drop in oil prices.

Most economists are sticking with their prediction for today’s employment report. The consensus view is the economy added 185,000 jobs in April and that the unemployment rate was unchanged at 8.8 percent. But the weaker data on layoffs and other recent reports have stirred concerns that the gains could shrink in the coming months.

A private trade group said the U.S. service sector, which employs 90 percent of the work force, grew last month at the slowest pace since August. And the National Federation of Independent Business said Thursday that nearly twice as many firms cut jobs in April as added workers. The number of firms planning to create jobs over the next three months was also weak.