More jobless than forecast as US recovery moderates
Published 06/08/2010 | 05:00
MORE Americans than expected filed applications for unemployment insurance last week, indicating firings remain elevated as the economic recovery moderated.
Labour Department figures showed initial jobless claims climbed by 19,000 to 479,000 in the week ended July 31, the most since April and exceeding economists' expectations.
The number of people receiving unemployment benefits dropped, while those getting extended payments rose.
A cooling economy means employers will resist taking on more staff in coming months, raising the risk that consumer spending will weaken further.
Economists said a government report due today would show the jobless rate rose last month as payroll increases weren't large enough to keep up with gains in the labour force,
"There really is no upside momentum in the labour market, and that's a critical long-term determinant of where the economy is going," said Steven Ricchiuto, chief economist at Mizuho Securities USA in New York. "People just aren't getting jobs."
Stocks dropped after the report on concern the labour market was deteriorating. The Standard & Poor's 500 Index fell 0.4pc. Treasury securities rose, sending the yield on the benchmark 10-year note down to 2.92pc.
Economists forecast claims would fall to an average of 455,000. The government revised the prior week's total to 460,000 from a previously reported 457,000.
There were no special factors influencing last week's report, a Labour Department spokesman told reporters as the figures were released. The timing of summer factory shutdowns caused claims to gyrate last month as fewer plants closed than was the case in prior years.
That effect probably washed out of the data last week, the spokesman said.
The government estimated the number of claims would drop by about 30,000 last week before seasonal adjustments, and instead they fell by about 14,000, the spokesman said.
The economy generated 90,000 private jobs in July, according to the median forecast of economists surveyed before today's jobs report from the Labour Department. Total payrolls probably fell by 65,000, reflecting the dismissal of temporary government workers as the decennial census wound down.
"Claims have been a poor predictor of private payrolls this year as the amount of churning in the labour market is higher in this recovery," Yelena Shulyatyeva, an economist at BNP Paribas in New York, said in a note to clients. "A higher level of initial claims is still consistent with job growth." (Bloomberg)