Mar 5, 2:56 PM EST

Applications for US jobless aid inch up to a 10-month high

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WASHINGTON (AP) -- The number of people seeking unemployment benefits rose last week to the highest level since May, though the pace of applications remains at a level consistent with steady hiring.

Weekly applications rose 7,000 to a seasonally adjusted 320,000, the Labor Department said Thursday. The four-week average, a less volatile measure, increased 10,250 to 304,750, a six-week high.

The number of applications tends to reflect the pace of U.S. layoffs. The four-week average has remained near or below 300,000 since September, a historically low level that typically signals healthy job gains.

More Americans are earning paychecks, and gas prices have plummeted from last summer, thereby boosting consumers' buying power. Americans also say they are more confident and are spending more, which has encouraged many businesses to hold on to their workers and to add staff.

There are some signs that heavy snow and unseasonably cold weather have played a role in increasing the number of layoffs. Several states said two weeks ago that applications had risen because of bad weather.

Kentucky said applications for unemployment benefits in that state rose nearly 3,000 in the week that ended Feb. 21 because of "inclement weather."

Guy Berger, an economist at RBS Securities, noted that snow and ice hit the Midwest and upper South in the final two weeks of February, likely boosting the number of applications. But that increase would have occurred after the government conducted its surveys for the February jobs report, to be released Friday.

"Tomorrow's employment data should not be terribly affected," Berger said in a note to clients.

Economists have forecast that the report will show employers added 240,000 jobs and that the unemployment rate dipped to 5.6 percent from 5.7 percent.

The state-level information is released with a one-week lag. Massachusetts, which has experienced huge snowfalls this winter, said applications jumped 3,800 two weeks ago, in part because of layoffs at schools.

That likely reflects temporary layoffs of school bus drivers, cafeteria workers and other employees during school system closures. Workers on temporary layoffs can apply for unemployment aid.

Still, the four-week average of applications for benefits is nearly 10 percent lower than it was a year ago. The reduced number of applications has coincided with a big step-up in hiring. Employers added more than 1 million jobs from November through January, the strongest three-month pace since 1997.

That pace of hiring probably won't be sustained for much longer, economists say. But they foresee healthy job gains for the rest of this year.

The strong job gains are showing signs of finally lifting paychecks for more workers. Average hourly pay rose 0.5 percent in January, the most in six years. Economists have forecast that wages ticked up 0.3 percent in February.

Other recent data suggest that the job market remains strong. Payroll processor ADP said Wednesday that businesses added 212,000 jobs in February. That was down from 250,000 in January but still a solid gain.

And a survey of services firms, including hotels, restaurants, insurance agencies and retailers, found that they stepped up hiring last month.

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