2012.05.31 16:39:39 UPDATE: US Jobless Claims Up By 10K Last Week; 1Q GDP Revised Down

--Jobless claims up by 10,000 to seasonally adjusted 383,000 in the week ended May 26. --First-quarter gross domestic product revised down to a 1.9% annual growth rate. --Private payrolls increased up 133,000 according to ADP National Employment Report, below expectations (Update wraps jobless claims, gross domestic product and ADP payroll reports, adds comments from analysts starting in third paragraph) By Eric Morath and Tom Barkley Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--The number of Americans applying for unemployment benefits rose for the fourth straight week while first-quarter growth was revised lower, the latest signs that the economy is losing momentum. A separate report showed private businesses hired at a very modest pace this month, further indication that overall employment growth will be tepid when the government releases its broadest reading of the labor market on Friday. "While the recovery has remained largely on track, it continues to struggle to generate sufficient positive momentum…to make any meaningful progress in absorbing the significant amount of slack," said Millan Mulraine, an analyst with TD Securities USA. Initial jobless claims rose by 10,000 to seasonally adjusted 383,000 in the week ended May 26, the Labor Department said Thursday. It was the biggest jump in claims since the first week of April and above expectations of economists surveyed by Dow Jones Newswires for 370,000 new claims. Claims for the week ended May 19 were upwardly revised to 373,000 from the initially reported 370,000. The four consecutive weeks of increased unemployment applications lowers hopes that May's payroll reading will be a significant improvement from the 115,000 jobs added in April. Generally, declining layoffs coincides with increased hiring. "The labor market has stabilized but no longer appears to be strengthening," said Steven A. Wood, chief economist with Insight Economics LLC. Economists predict the economy added 155,000 jobs in May and forecast the unemployment rate to remain unchanged at 8.1%. Reinforcing expectations for lackluster growth, U.S. private-sector jobs increased by only 133,000 in May, according to a report from payroll processor Automatic Data Processing Inc. (ADP) and consultancy Macroeconomic Advisers. The gain was below economists' expectations of 150,000 and only slightly above April's revised figure of 113,000. Separately, a Commerce Department report showed the economy slowed more than initially thought in the first quarter. Gross domestic product, the broadest measure of all the goods and services produced in an economy, increased at a 1.9% annual rate from January through March. A month ago, Commerce estimated a 2.2% gain. The economy has cooled off since expanding at the fastest pace in a year and a half in the final quarter of 2011, with a 3.0% growth rate. But the fourth-quarter acceleration was driven partly by companies aggressively restocking inventories to catch up with demand. Thursday's report showed the inventory buildup was even less than expected in the first quarter, with the contribution to GDP falling to just 0.2 percentage point from 0.6 percentage point. Consumer spending was also slightly weaker than expected, rising 2.7% instead of 2.9% as initially thought. Still, that marked the biggest gain in consumption since the fourth quarter of 2010. Declining government spending also dragged on growth. In a positive sign, companies registered their biggest quarterly gain in profits since the end of 2009. Corporate profits--after tax and unadjusted for inventories and capital consumption--increased at an 11.7% annual rate from the previous quarter. Profits were up 14.8% year on year in the first quarter, Commerce said. "That consumer and business spending are now the main growth drivers...is an encouraging sign, but policymakers will remain wary that the economy is vulnerable to negative shocks," said Peter Newland, an analyst with Barclays Bank PLC. -By Eric Morath and Tom Barkley; Dow Jones Newswires; 202-862-9279; eric.morath@dowjones.com --Andrew Ackerman, Kathleen Madigan and Jeffrey Sparshott contributed to this report. (END) Dow Jones Newswires May 31, 2012 10:39 ET (14:39 GMT)