WASHINGTON (AP) — The number of newly laid-off workers seeking unemployment benefits jumped unexpectedly last week, the government said Thursday, reversing three weeks of declines.þþThe Labor Department reported that new applications for unemployment insurance rose to a seasonally adjusted 444,000, up 15,000 from the previous week. Economists expected claims to drop to 420,000.þþThe increase indicated that the slowing economy was taking a toll on the job market. Many economists consider claims above 400,000 to be a sign of a weak economy. Initial claims were 320,000 in the same week last year.þþThe four-week moving average was 438,000, down 3,250 from the previous week. A six-year high of 457,000 was reached in late July. þþThe number of people continuing to receive unemployment benefits rose 6,000, to 3.44 million for the week ended Aug. 23. That number does not include people who have exhausted their regular benefits and have requested extended assistance under an emergency program.þþSeparately, the Labor Department said that productivity, the amount of output for every hour of work, rose at a 4.3 percent annual rate in the second quarter, a full percentage point higher than economists expected.þþLabor costs fell 0.5 percent, the department said. The combination of higher productivity with lower costs should help contain inflation and give the Federal Reserve some breathing room on credit policy.þþCaught between slowing growth and rising prices, the Fed is expected to leave a key interest rate alone at 2 percent when it meets next, on Sept. 16.þþRetail sales were mixed, with many stores reporting sluggish back-to-school sales, though sales at Wal-Mart Stores came in better than analysts had expected.þþEconomists attributed some of the increase in Thursday’s jobless claims to an effort by the Labor Department to notify individuals about the availability of extended benefits, which Congress approved in June.þþSeveral economists have said the distortions from that program have probably faded. A Labor Department analyst also said the figures did not include any impact from Hurricane Gustav.þþThe unexpected jump could foreshadow more rough news for the job market on Friday, when the Labor Department reports monthly unemployment numbers. Economists expect the department to say that employers eliminated 75,000 jobs in August, which would be the eighth consecutive month of job cuts.þþThe department is also expected to report that the unemployment rate rose to 5.8 percent, from 5.7 percent in July.þþSeparately, a private research group said Thursday that the service sector grew unexpectedly in August for the first time in three months as new orders improved and inflation moderated.þþThe Institute for Supply Management, a trade group of purchasing executives, said the services sector index rose to 50.6 in August, from 49.2 in July, exceeding the forecast of 50, the average estimate of Wall Street economists surveyed by Thomson Financial/IFR.þþA reading below 50 signals contraction, while a reading above 50 indicates growth.þþ
Source: NY Times
