Demand for jobless benefits in the US rose last week, raising fears that recent progress on the jobs front may have stalled as the recovery from last year's recession has lost momentum.

New unemployment insurance claims rose to 403,000 last week from a revised 395,000 the previous week. Economists generally consider a level above 400,000 recessionary. New claims had been on a downward trend from a decade-high of 525,000 struck in the wake of last year's terrorist attacks, but they have been rising this month.

Economists caution weekly figures are volatile. The four-week moving average also rose to its highest level since early July, to just below 400,000. The total number of claims increased at the fastest pace in five months to 3.59 million. The labour figures are the latest to raise concerns about consumer spending, following reports of surveys showing faltering consumer confidence.

After showing a sharp rebound through the first quarter, the US economic recovery appears to have stalled. The Commerce Department affirmed this in a report yesterday on gross domestic product (GDP). It left unchanged its preliminary estimate that the economy grew by a seasonally adjusted annual rate of 1.1 per cent through the second quarter - an abrupt slowdown from 5 per cent. Excluding growth in inventories, it actually shrank.

While it left the headline figures unchanged, estimates for homebuilding, business investment and government spending were revised downward, while exports and inventories were revised upward.

The Commerce Department revises GDP figures at least three times for each quarter and in later annual revisions as it relies on the latest monthly economic data, direct reports from companies, tax filings and other sources.

The third and "final" estimate of second-quarter GDP is due to be released in late September.

However, the Commerce Department report contained some positive news. A measure of corporate profits continued to grow, which follows a report earlier this week suggesting business investment was on the rise.

Recent reports have suggested businesses may be turning toward expansion after two years of retrenchment, just as consumers appear to be losing their conviction. But Mr Jerry Jasinowski, president of the National Association of Manufacturers, said on Wednesday the recovery was turning out to be much weaker than those of the past. - (Financial Times Service)