More Americans than projected filed applications for unemployment insurance last week, indicating redundancies remain elevated as the recovery moderated. Initial jobless claims climbed by 19,000 to 479,000 in the week ended July 31, the most since April Labor Department figures showed today in Washington.
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 consumer spending will weaken further. The jobless rate rose last month as payroll increases were not large enough to keep up with gains in the labour force, economists forecast a government report tomorrow will show. There really is no upside momentum in the labour market, and thats a critical long-term determinant of where the economy is going, said Steven Ricchiuto, chief economist at Mizuho Securities in New York. People just arent getting jobs.
Stocks dropped after the report on concern the labour market was deteriorating. The Standard and Poors 500 Index fell 0.3 per cent to 1,123.75 at 2.05pm in New York. Treasury securities rose, sending the yield on the benchmark 10-year note down to 2.90 per cent from 2.95 percent late yesterday. Retailers in the US reported July sales gains that missed analysts estimates as consumers reduced spending before the back-to-school season. Sales at 30 chains climbed 3 per cent, less than the 3.2 per cent average of analyst projections, Retail Metrics said. It marked the fourth straight month that sales have trailed estimates. J.C. Penney Co. sales fell 0.6 per cent, short of expectations for a 3.5 per cent gain. Economists forecast claims would fall to 455,000, according to the median of 43 projections. Estimates ranged from 444,000 to 470,000. The government revised the previous weeks total to 460,000 from 457,000. There were no special factors influencing last weeks report, a Labor 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 in prior years. – Bloomberg
