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US new jobless claims drop slightly
(Agencies)
Updated: 2009-09-03 23:09

US new jobless claims drop slightly
Attendees line up for an interview with a prospective employer at a job fair in Washington, August 6, 2009. [Agencies]
US new jobless claims drop slightly

WASHINGTON: New jobless claims fell slightly last week while the number of Americans receiving unemployment benefits rose, a sign the job market's recovery will be long and bumpy.

While most economists believe the recession has ended, they predict the jobless rate will keep rising until at least next summer as the country struggles to mount a sustained recovery. The worry is that household incomes will remain depressed and consumer spending, which accounts for 70 percent of the total economy, will continue to lag.

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"The lack of job creation remains a big headwind for cash-starved and credit-constrained consumers and thus a major impediment for the fledging recovery," Sal Guatieri, senior economist at BMO Capital Markets, said in research note.

Most retailers posted sales declines last month as shoppers restrained back-to-school purchases to focus on necessities. Discounters did better than upscale chains, but the results Thursday raised further concern about the upcoming holiday season.

The Labor Department said the number of laid-off workers applying for benefits dipped to 570,000 last week from an upwardly revised 574,000. That was a weaker performance than the drop to 560,000 claims that economists expected.

The number of Americans receiving jobless benefits totaled 6.23 million, up 92,000 from the previous week, which had been the lowest level since early April. Economists surveyed by Thomson Reuters had expected that number, which lags new claims by a week, to fall to 6.13 million.

Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies' willingness to hire new workers.

First-time claims have trended down in recent months and are well below the recession's high of 674,000 hit in the first week in April. But even with the improvement, they are running at levels well above the 325,000 mark considered a sign of a healthy labor market.

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