Jobless Claims Fall, But Not by Much

New U.S. claims for unemployment benefits fell less than expected last week, a government report showed on Thursday, suggesting the labor market was struggling to regain momentum.

Initial claims for state unemployment benefits edged down 1,000 to a seasonally adjusted 428,000, the Labor Department said.

Economists polled by Reuters had forecast claims dropping to 420,000. The prior week's figure was unrevised at 429,000.

It was the 12th straight week that claims have been above 400,000, a level that is usually associated with a stable labor market. Employment stumbled badly in May, with employers adding just 54,000 jobs -- the fewest in eight months.

Nonfarm payrolls are expected to have increased 90,000 this month, according to a Reuters survey, with the unemployment rate edging down to 9.0 percent. The employment report for June will be released on July 8.

A Labor Department official said one state was estimated, noting there was nothing unusual in the state-level details.

The continued elevation of claims could raise concerns that the economy is in a prolonged soft patch. The economy slowed significantly as the year started and continued to lose momentum through the second quarter, hit by high gasoline prices and supply chain disruptions after the March earthquake in Japan.

However, many economists and the Federal Reserve believe activity will pick-up in the third quarter, benefiting from falling gasoline prices and an easing of supply disruptions as the situation in Japan improves.

The four-week moving average of unemployment claims, a better measure of underlying trends, nudged up 500 to 426,750.

The number of people still receiving benefits under regular state programs after an initial week of aid fell 12,000 to 3.70 million in the week ended June 18. So-called continuing claims covered the survey week for the employment report's household survey, from which the unemployment rate is derived.

The number of people on emergency unemployment benefits climbed 1,471 to 3.30 million in the week ended June 11, the latest week for which data is available. A total of 7.51 million people were claiming unemployment benefits during that period under all programs, down 30,701 from the prior week.