Weekly Jobless Claims Rise, but Lower than a Year Ago
The number of newly laid off people signing up for jobless benefits rose last week, suggesting that employment conditions, while softening a tad, still remain good.
The Labor Department reported Thursday that new applications filed for unemployment insurance increased by a seasonally adjusted 7,000 to 316,000 for the week ending Aug. 4. The increase left claims at their highest point since late June.
Economists were predicting claims would be lower, around 310,000 for last week.
Still, claims are lower now than they were a year ago, when they stood at 319,000.
In other economic news, the back-to-school shopping season had a disappointing start in July as people turned cautious amid turmoil on Wall Street, harder-to-get credit and the worsening housing slump.
Merchants reported sluggish monthly sales results, with the weakest performers being mall-based apparel chains, particularly teen merchants like Pacific Sunwear of California and Wet Seal, Wal-Mart Stores, the nation's largest retailer, posted a slim gain but warned that its increased discounting is hurting profit margins.
Consumer spending is a major shaper of overall economic activity. Individuals tightened their belts in the second quarter and are expected to be subdued through the current July-to-September period, analysts said.
Stocks plunged as fresh credit fears overwhelmed investors. The Dow Jones industrial tumbled narly 172 points in morning trading.
On the labor market front, other recent barometers suggest some cooling in hiring, partly reflecting the toll of the sour housing market and struggles in the auto industry.
Last week the government reported that the nation's unemployment rate nudged up to 4.6% in July, a six-month high. New job creation also slowed.
Employers increased payrolls by 92,000 last month, down from 126,000 in June, the government said last week. It marked the fewest add-ons in a month since February.
In Thursday's layoffs report, the four-week moving average of new claims, which smooths out week-to-week volatility, rose last week to 307,750, an increase of 1,750 from the prior week. It was the highest level since July 21.
The number of people continuing to collect unemployment benefits went up by 39,000 to 2.56 million for the work week ending July 28, the most recent period for which this information is available. That was the highest since early July.
Federal Reserve Chairman Ben Bernanke and his central bank colleagues on Tuesday said they expect the labor market and the national economy to hold up to strains from Wall Street turbulence, tightening credit conditions and the housing slump.
They predicted that the economy would expand at a moderate pace in the months ahead "supported by solid growth in employment and incomes."
Against this backdrop, Fed policymakers kept an important interest rate at 5.25%, where it has been for more than a year.
After nearing stalling in the first three months of this year, the economy rebounded in the April-to-June quarter, growing at a solid 3.4% pace. Growth is expected to be slower through the rest of this year, clocking at a pace of around 2.5%.