WASHINGTON (Reuters) — Claims for jobless aid rose last week, the government reported on Thursday, but a gauge of future home sales rose in a hopeful sign for the battered housing sector.þþThe higher-than-expected June signings of home sale contracts offered some hope that the housing market might be stabilizing. But the jobless claims increased concerns about consumer spending and the corporate profit outlook.þþInitial claims for state unemployment benefits rose 7,000 last week to 455,000, the highest in six years, the Labor Department said. But it said a new federal program to extend benefits was partly the reason for the elevated level.þþStill, the four-week moving average of claims, which irons out weekly fluctuations and provides a better view of the underlying trend, also showed that jobs were tough to find as the economy copes with the worst housing downturn since the Great Depression.þþ“Look past the choppiness and bias in the data and what you’ll see is a fundamental weakness in the labor market,” said Michelle Meyer, an economist at Lehman Brothers in New York.þþ“We’ll see the unemployment rate peaking at 6.3 percent next year,” she said. It hit 5.7 percent in July.þþThe four-week average of new claims jumped to 419,500, from 392,750 the previous week. This was the highest since July 2003 and the first time since that year that the four-week moving average breached 400,000 — a threshold linked with recession.þþA separate report released later on Thursday signaled that Americans were increasingly turning to credit cards and consumer loans to maintain spending in the face of rising living costs.þþJune consumer credit rose $14.33 billion, at a 6.7 percent annual rate, to $2.586 trillion, the Federal Reserve said. Analysts polled by Reuters expected a $6 billion rise.þþHousing lies at the heart of the economic problems, and the rise in the index of pending home sales, which is based on contracts signed in June, was a welcome bit of good news.þþ“This is telling us that sales have stabilized. This raises some hopes that we’ve flattened out, which doesn’t mean the problem is solved,” said Pierre Ellis, senior global economist at Decision Economics in New York.þþThe 5.3 percent rise in the index brought it to 89.0, its highest level since October.þþNot everyone, however, was convinced it was a sign of strength.þþ“We have to see how much of that is attributable to bank-owned properties or foreclosures, which seem to be driving the markets right now,” said Andrew Richman, managing director at SunTrust’s personal asset management division in West Palm Beach, Fla.þþ“There are some bottom feeders coming in to buy some of these homes in distressed situations,” he said. “How long that will last I don’t know.”þ
Source: NY Times
