Jump in jobless figures feeds fears US recovery is stalling
A SERIES of unremittingly awful economic data from the US provided further evidence yesterday of the fragility of America's economic recovery as claims for jobless benefits jumped unexpectedly and manufacturing in the industrial heartland contracted.
The main Wall Street indices were all down by more than 1.5pc in afternoon trading amid fears that the economic recovery had stalled. President Barack Obama added to the gloom by issuing an unexpected announcement on the economy just before he left for a family holiday in Martha's Vineyard, Massachusetts, urging political unity on the economy and saying that this was no time for "political games".
Speaking after a nationwide fundraising trip, where he met workers and small business owners, Mr Obama criticised Republican obstruction to legislation that would help small businesses to raise capital and boost jobs, saying their stance "defies common sense".
The president's intervention followed data from the US Labour Department showing that the number of people claiming unemployment benefits last week reached the half-million mark for the first time since November.
Initial claims rose above analysts' expectations by 12,000 last week to 500,000, the third successive week of rises, and added to fears that the country was slipping back into recession as employers started laying off workers again.
The four-week moving average of first-time jobless claims stands at 483,000, up from 474,000 the week before. Jobless claims had declined steadily last year from a peak of 651,000 in March 2009 as the economy recovered from the downturn. They hit a low of 427,000 in July before rising steadily over the past six weeks.
The Labour Department said that construction groups were letting go of more workers as the housing sector slumped and federal stimulus spending on public works projects wound down. State and local governments are also cutting jobs to close large budget gaps.
The Congressional Budget Office warned yesterday that high levels of unemployment would continue to hurt the recovery, but it predicted a 3pc economic growth rate this year.