Surprise rise in jobless claims casts pall on economy
Credit: Reuters/Shannon Stapleton
WASHINGTON | Thu Aug 5, 2010 9:20am EDT
WASHINGTON (Reuters) – New claims for unemployment benefits unexpectedly rose last week, government data showed on Thursday, underscoring a weak labor market and the fragile economic recovery.
Initial claims for state unemployment benefits rose 19,000 to a seasonally adjusted 479,000 in the week ended July 31, the Labor Department said. That was the highest level in claims since early April.
Analysts polled by Reuters had forecast claims dipping to 455,000 from the previously reported 457,000 the prior week, which was revised modestly up to 460,000 in Thursday’s report.
“The bottom line is that any recovery in employment is going to be very slow. It’s likely that we’re still at 9.5 percent unemployment or awfully close to it by the end of the year,” said Scott Wren, senior equity strategist at Wells Fargo Advisors in St. Louis.
U.S. government debt prices rose and the stock index futures extended losses on the weak jobless claims data. The U.S. dollar fell against the yen.
The four-week average of new jobless claims, considered a better measure of underlying labor market trends as it irons out week-to-week volatility, rose 5,250 to 458,500.
A Labor Department official said there was nothing unusual in the data from the state.
The latest claims data has little bearing on the government’s closely watched employment report for July, due on Friday, as it falls outside the survey period.
Nonfarm payrolls probably fell 65,000 last month after declining 125,000 in June as temporary workers hired to conduct the decennial census were let go, according to a Reuters survey.
Private-sector payrolls are seen rising a modest 90,000 and the unemployment rate is expected to climb to 9.6 percent from 9.5 percent in June.
After falling rapidly in 2009, jobless claims have stalled this year and are anchored above the 400,000 to 450,000 range that analysts say is normally associated with sustainable jobs growth.
The scarcity of jobs is putting a strain on the economy’s fragile recovery from its longest and deepest downturn since the Great Depression. Growth slowed to a 2.4 percent annual rate in the second quarter after expanding at a 3.7 percent pace in the first three months of this year.
Other data on Thursday showed several U.S. retailers posted July sales below analysts’ expectations in the latest sign that skittishness about high unemployment and the economy in general are causing consumers to cut spending.
So far seven of the 11 retailers that reported sales have missed analysts’ forecasts, according to Thomson Reuters data.
In the week ended July 24, a total of 4.54 million people were still receiving benefits after an initial week of aid, down 34,000 from the prior week. Analysts polled by Reuters had forecast so-called continuing claims slipping to 4.54 million.
The number of people on emergency benefits increased 60,993 to 3.31 million in the week ended July 17.
(Reporting by Lucia Mutikani; Editing by Neil Stempleman)