US jobless claims jump to six-month high

WASHINGTON (AFP) – – The number of Americans filing new claims for jobless benefits jumped unexpectedly last week to the highest level in six months, the government said Thursday, adding to US recovery concerns.

Initial claims were well above most economists’ expectations of 465,000, climbing by 2,000 to 484,000 in the week to August 7 from the previous week’s upwardly revised figure of 482,000.

“Claims’ failure to move lower in the latest week was a disappointment and could point to further labor market weakness,” warned Moody’s Economy.com economist Andrew Gledhill.

Unemployment is the biggest concern of US President Barack Obama, who is facing an uphill battle to lift the fortunes of his Democratic Party in congressional elections in November.

The US economy shed more jobs than expected in July, the Labor Department said last week, heightening fears that the world’s largest economy will take years to fully recover from a crippling recession.

Adding to signs the labor market is slipping as businesses remain cautious about hiring, initial jobless claimes remained above 480,000 for the second consecutive week — noticeably higher than the 460,000 range that has been the story for much of the year.

“This is troubling, as labor market improvement is needed to help spur the recovery along as other supports such as the inventory boost and government aid fade,” Gledhill said.

The four-week moving average for the new jobless claims, a less volatile indicator than the week-to-week figures, rose to 473,000, an increase of 14,250 from the previous week’s revised average of 459,250, the Labor Department said.

But the total number of Americans receiving unemployment benefits have fallen, the department data showed.

The number of insured unemployed during the week ending July 31 was 4.452 million, a decrease of 118,000 from the preceding week’s revised level of 4.570 million.

“Although the continuing claims numbers show modest improvement, the report, on balance, is consistent with continued softness in the labor market,” said Barclays Capital analyst Michael Gapen.

Unemployment at near 10 percent remains a key obstacle to US economic recovery.

The Federal Reserve warned this week the US recovery would be “more modest” than expected and that growth from a brutal recession has slowed in recent months.

In an effort to bolster market confidence, the central bank on Tuesday announced a return to crisis-era stimulus spending. But the policy shift was seen more like a plumb line that revealed the depths of the Fed’s concerns.

A total of 131,000 jobs were lost last month as federal and local governments cut staff — the unemployment rate remained stuck at 9.5 percent.

Nonfarm payrolls have been on a steep decline since June as temporary government census workers completed their assignments.

Even as many of these workers filed for unemployment benefits as soon as their jobs were eliminated, some analysts remain hopeful the jobs situation will stabilize.

“Theoretically, this reaction coupled with a stagnant or worsening employment situation should have driven the initial claims level above 500,000,” analysts at Briefing.com said in a note.

“Since that has not happened, it can be said that the employment situation is showing some signs of stability,” they said.