News from the Labor Department earlier this morning indicating the number of Americans filing first-time claims for jobless benefits rose to an eight-month high last week did nothing but add support to the current rally in the mortgage market. Initial claims for state unemployment benefits rose 43,000 during the week ended April 30th to a seasonally adjusted 474,000, the highest mark since mid-August 2010. Applications for unemployment benefits have topped the key 400,000 level in each of the past four weeks. Requests for jobless benefits usually fall below 400,000 per week during periods of strong economic growth.


A Labor Department spokesperson said a spring break holiday in New York, a new emergency benefits program in Oregon, and auto shutdowns caused by the effects of the disaster in Japan were the main reasons for the outsized surge in claims.


This week's initial claims numbers fell outside of the survey period for tomorrow's much more important April Nonfarm Payroll report. Even so, based on today's surprisingly soft weekly claims data, many traders will be "penciling in" expectations the April Nonfarm Payroll figures will indicate growth in the labor sector has stalled. Look for mortgage interest rates to continue to creep lower should headline job creation for April fall below 180,000 and/or the national jobless rate climbs to 8.9% or higher.


A second report from the Labor Department this morning showed first-quarter nonfarm productivity increased at a 1.6% annual rate, braking sharply from the 2.9% pace set during the last three months of 2010. Most mortgage investors were so busy responding to the big surge in the weekly claims data they had little time to give this second report anything more than a passing glance.