Jobless Claims in U.S. Climb for Second Week to One-Month
Applications for U.S. unemployment benefits climbed last week to a one-month high, showing scant progress in the labor market that’s left Americans more pessimistic about the economy.
Jobless claims rose by 4,000 for a second week to reach 372,000 in the period ended Aug. 18, Labor Department figures showed today in Washington. Consumer confidence dropped last week to the lowest level since January, according to the Bloomberg Consumer Comfort Index.
Companies are keeping payrolls lean as a weaker global economy and lack of clarity on U.S. tax policy next year cloud the demand outlook, one reason the Federal Reserve may be closer to further monetary stimulus. Residential real estate is a source of strength for the expansion, according to a report that showed new-home sales matched a two-year high in July.
“The economy is growing, but it’s still moderate growth, and the labor market is still weak,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “We’re also getting better numbers in terms of building activity. That’s certainly adding to growth and offsetting some of the weakness we’re seeing from the consumer.”
Stocks fell, as the Standard & Poor’s 500 Index posted its biggest decline in a month, amid concern European leaders aren’t making progress in solving the region’s debt crisis. The S&P 500 dropped 0.8 percent to 1,402.08 at the close in New York.
Euro-area services and manufacturing output contracted for a seventh straight month in August, adding to signs of a deepening economic slump as European leaders struggle to contain the fiscal crisis.
A composite index based on a survey of purchasing managers in both industries in the 17-nation euro area was little changed at 46.6 after 46.5 in July, Markit Economics said today in an initial estimate. Readings below 50 signal contraction.
China’s manufacturing may be contracting at a faster pace this month, another report showed. A preliminary reading of 47.8 for a purchasing managers’ index released today by HSBC Holdings Plc and Markit compares with July’s final 49.3 figure.
The median forecast of 41 economists surveyed by Bloomberg called for 365,000 jobless claims. Estimates ranged from 355,000 to 373,000. The Labor Department revised the previous week’s figure to 368,000 from an initially reported 366,000.
“We are stuck in this mediocre range for claims,” said Michael Hanson, a senior U.S. economist at Bank of America Corp. in New York. “In an uncertain environment, firms tend not to stick their neck out and make big hiring and investment decisions.”
Joblessness has been above 8 percent since February 2009 -- the longest stretch in the post-World War II era.
The Bloomberg Consumer Comfort Index decreased to minus 47.4 in the period ended Aug. 19, the sixth consecutive drop, from minus 44.4 in the prior period. The series of declines is the longest since 2008, when the U.S. was in recession.
Higher gasoline prices are taking a bigger chunk out of Americans’ paychecks, and an increase in food prices caused by a drought in parts of the country may further hurt finances. In addition, job growth hasn’t proceeded fast enough to bring the unemployment rate below 8 percent, indicating incomes may fail to keep pace with escalating expenses.
“Rising food and gas prices have stoked a bout of discomfort among a broad section of the American public,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “The pain has been especially evident down the income ladder in households that will bear the disproportionate burden of adjustment to higher prices. The result will likely be a net slowing in discretionary spending.”
All three of the Bloomberg index’s components deteriorated last week. The gauge of Americans’ views on the current state of the economy fell to minus 77.3 last week from minus 75.6 in the prior period, and the buying-climate index declined to minus 48.9 from minus 46.4, both the weakest since January.
A barometer of personal finances slid for a fourth week, to minus 15.9, the lowest since November, from minus 11.1. About six of every 10 respondents said their finances were in bad shape.
The industry that precipitated the last recession --housing -- is helping underpin the economy. Sales of new homes climbed 3.6 percent to a 372,000 annual pace, following a 359,000 rate in June that was higher than previously estimated, figures from the Commerce Department showed. Last month’s rate was the same as in May, which was the strongest since April 2010.
Buyers are returning to the market to take advantage of cheaper properties and record-low mortgage rates, helping to boost orders at builders like Toll Brothers Inc. The median price for a new house fell 2.5 percent in July from the same month last year, to $224,200.
At the same time, the value of all existing U.S. homes climbed 1.8 percent in the second quarter from the previous three months, the biggest gain since late 2005, a report from the Federal Housing Finance Agency also showed today.
Still, competition from foreclosures, unemployment and limited credit pose hurdles to a more pronounced rebound, one reason Fed policy makers are monitoring housing data.
Many Fed policy makers said additional stimulus probably will be needed soon unless the economy shows signs of a durable pickup, according to minutes of their most recent meeting released yesterday.
“Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery,” according to the record of the Federal Open Market Committee’s July 31- Aug. 1 meeting.
Fed Chairman Ben S. Bernanke could signal new measures to support the expansion in a speech next week.
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