Mixed news from US as jobs pick up but spending is sluggish
Published 29/07/2011 | 05:00
APPLICATIONS for unemployment benefits in the United States fell by more than had been forecast last week to the lowest level since April -- a sign that the weakness in America's labour market is fading.
Jobless claims dropped by 24,000 to 398,000 in the week ended July 23, Labour Department figures showed.
Meanwhile, the number of contracts to buy second-hand homes unexpectedly rose in June.
However, a report tomorrow is expected to show that household purchases in the last quarter grew at the slowest pace since 2009 as the jobless rate climbed above 9pc and payroll gains slowed.
"The (jobless) figures are encouraging, though we need to see a sustained decline in claims," said James O'Sullivan, an economist at MF Global. "The direction in claims invariably sends the right signal for growth in employment."
Stocks rose as the reports helped offset concern about the impasse over the US budget deficit. The Standard & Poor's 500 Index climbed 0.8pc in early-afternoon trading in New York. Treasury securities also rose, sending the yield on the 10-year note down to 2.94pc.
The number of contracts to purchase previously owned homes rose 2.4pc in June, figures from the National Association of Realtors also showed.
The increase in pending home resales followed an 8.2pc gain in May. But that rise didn't translate into an improvement in sales as contracts were cancelled due to stricter lending rules and low appraisals, the group said earlier this month.
"The stuff in Washington is really weighing on people," said Brian Jones, an economist at Societe Generale in New York.
He added: "What's more worrying is that if consumer confidence has deteriorated that much, you can imagine what business confidence has done."