Sept. 6 (Bloomberg) -- The number of Americans continuing to receive unemployment benefits rose to a six-month high, suggesting that hiring has cooled, even as new applications fell more than forecast last week.

Benefit rolls swelled to 2.598 million in the week ended Aug. 25, the highest since February, the Labor Department reported today in Washington. Initial unemployment claims fell by 19,000 to 318,000 in the week that ended Sept. 1.

Heightened concern about economic growth may be causing companies to cut spending and hiring. Federal Reserve Chairman Ben S. Bernanke said last week the central bank would ``pay particularly close attention to the timeliest indicators'' and do what's needed to prevent the recent credit-market rout from undoing the six-year economic expansion.

``Demand has been weak enough to slow the pace of hiring but not raise the pace of firing,'' said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York. If this continues, ``it will mean lower payroll numbers and higher unemployment.''

Economists forecast claims would fall to 330,000 from an originally reported 334,000 a week earlier, according to the median of 42 projections in a Bloomberg News survey. Estimates ranged from 315,000 to 342,000.

Treasuries were little changed. The yield on the benchmark 10-year note was 4.49 percent at 9:27 a.m. in New York, from 4.47 percent late yesterday.

19-Month High

The average number of people continuing to collect state unemployment benefits over the four weeks ended Aug. 25 rose to 2.572 million, the highest since January 2006. The four-week moving average for initial, a less volatile measure, increased to 325,750, the highest since April.

The unemployment rate among people eligible for benefits, which tends to track the U.S. jobless rate, increased to 2 percent, from 1.9 percent. Thirty-three states and territories reported an increase in claims while 20 had a decrease.

The data on continuing claims, the unemployment rate and the states and territories are reported with a one-week lag.

The level of continuing claims has edged up in recent weeks and some economists interpret that as a sign it's becoming harder for Americans to find jobs.

Productivity Growth

A separate report today from the Labor Department showed worker productivity accelerated in the second quarter and labor costs cooled, lowering the risk of a pickup in inflation as the Fed weighs cutting interest rates.

Productivity, a measure of employee efficiency, rose at an annual rate of 2.6 percent from April through June, up from a previous estimate of 1.8 percent, according to a revised report. Labor expenses climbed at a 1.4 percent pace, less than reported last month.

The government is scheduled to release its monthly payrolls survey tomorrow at 8:30 a.m. in Washington. Economists, including those at Lehman Brothers Holdings Inc. and Deutsche Bank, lowered their jobs forecasts yesterday after the ADP Employer Services report showed U.S. companies added 38,000 jobs in August, the fewest in four years.

A survey of consumers by the Conference Board showed the proportion finding jobs hard to get last month rose to 19.7 percent from 18.7 percent in July. The share of respondents who found jobs plentiful dropped to 27.5 percent, the lowest since November.

Average for Year

Initial jobless claims so far this year have averaged 318,000 a week, compared with 313,000 for all of 2006.

In almost all districts, there were ``modest increases in Employment,'' the Fed said in its Beige Book, a report on regional economic activity issued yesterday.

Economists and traders expect Fed policy makers to cut the benchmark overnight lending rate between banks at or before the next scheduled meeting on Sept. 18. Last month, the Fed cut the rate charged on direct loans to banks to increase the availability of capital after global stock markets plunged.

First American Corp., the largest U.S. title insurer, said Sept. 4 it will cut 1,300 jobs, or about 3 percent of its workforce, to reduce costs as home sales slow. LandAmerica Financial Group Inc., another title insurer, said Aug. 28 it will eliminate 1,100 jobs in the second half of this year.

Other companies say they are having fewer troubles from the volatility in the credit markets and the tighter lending standards that have resulted from rising mortgage defaults.

The ``headwinds'' of a slowing economy and tighter credit won't delay Ford Motor Co.'s return to profitability, Chief Executive Officer Alan Mulally said on Aug. 29 in an interview. Ford is cutting more than 40,000 jobs in North American under a restructuring it announced last year. About 27,000 employees had departed as of mid-June.

To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

Last Updated: September 6, 2007 09:29 EDT