Jobless Claims Down 2,000 Last Week; Continued Claims Edge Up
The number of U.S. workers filing new claims for jobless aid fell 2,000 last week, government data Thursday showed, while the number of people still collecting benefits rose to its highest since April.
Separately, the Congressional Budget Office said the U.S. budget deficit will shrink to $158 billion in fiscal 2007, down from its March estimate of $177 billion, according to a congressional source.
Initial filings for state unemployment insurance benefits fell to 322,000 for the week ended Aug. 18 from an upwardly revised 324,000 the prior week, the Labor Department said.
Analysts on Wall Street had expected claims to measure 320,000 last week.
The four-week moving average of claims, which irons out weekly volatility to provide a better sense of underlying job-market trends, rose for the third straight week, climbing to 317,750 last week from 313,000.
U.S. government debt prices were little changed by the data.
The number of unemployed people still on the benefit rolls after drawing an initial week of aid rose to its highest level since mid-April.
"Continued claims continue to edge up," said Christopher Low, chief economist for FTN Financial in New York. "It's an indication of net hiring; the pace of hiring has slowed in recent weeks given the turmoil in the credit market."
"There are about 12,000 layoffs in the mortgage industry in the last 10 days, some of which showed up in this report. But it hasn't had a material impact," Low said.
The number of so-called continued claims rose 16,000 to 2.57 million in the week ended Aug. 11, the latest period for which these figures are available. It had been expected to come in at 2.56 million.
Meanwhile, the CBO's latest deficit projection for this fiscal year, which ends Sept. 30, was significantly lower than a $205 billion estimate issued by the Bush administration on July 11.
The U.S. budget deficit in fiscal 2006 was $248 billion, down from a record high $413 billion in fiscal 2004.
Big corporate bonuses and a bullish stock market for most of the present fiscal year generated strong income tax revenues.
Recent capital losses will cut into tax collections from the financial sector in the next fiscal year, which begins Oct. 1. CBO's deficit forecast for fiscal 2008, which will be officially released on Thursday, may not be a realistic view of next year's budget outlook, the congressional source said.
Analysts have said much depends on whether the latest turmoil in financial markets translates to a general economic slowdown.
Contributions to recent tax revenue, such as strong corporate profits and capital gains, will not be sustained and outlays for war costs and entitlements will grow, analysts warned.
The effect of a crisis in debt markets is still unfolding and increases the possibility of a slowdown, although the economy overall does not look weak, according to analysts.