-
Begging on the street - Source: Reuters
A bigger-than-expected rise in the number of US workers filing
new claims for jobless aid last week signalled the labour market
remained fragile, even as a measure of economic prospects hit a
two-year high last month.
Initial claims for state jobless insurance increased 11,000 to
531,000 last week, the Labor Department said, after falling for two
consecutive weeks.
Financial markets had expected new claims to come in at just
515,000.
Separately, the Conference Board said its index of leading economic
indicators rose one percent to 103.5, the highest level since
October 2007.
But optimism over the robust increase was tempered by a report
showing that home prices fell 0.3% in August.
"The data confirm an overall picture of a gradual economic
improvement, but we are not seeing it in the commercial real estate
and jobs markets," said Larry Milstein, head of government and
agency trading at RW Pressprich & Co in New York.
US stocks were trading mixed as investors digested the economic
data and strong quarterly earnings from the world's largest
hamburger chain McDonald's Corp and diversified manufacturer
3M Co.
While data and earnings reports from some companies strongly
indicate the economy started growing again in the July-September
period after four quarters of decline, persistently high
unemployment has raised questions about the recovery's
durability.
White House economic adviser Lawrence Summers said in an interview
on Wednesday that the economy was set for a recovery, but he
cautioned that the growth pace might be moderate and the job market
would not revive immediately.
Analysts reckon the Federal Reserve, which is holding overnight
interest rates near zero, will want to see labour markets beginning
to heal before it withdraws its support for the economy.
Boston Federal Reserve Bank President Eric Rosengren acknowledged
on Thursday that the economy would grow reasonably in the second
half of this year, but said the US central bank needed to see more
progress before taking some of its economic support away.
Some hopeful signs on jobs
The US unemployment rate rose to a 26-year high of 9.8% in
September and is expected to increase well into 2010.
Still, the pace of job losses has moderated considerably from early
this year.
The four-week moving average for new jobless claims fell by 750
to 532,250 last week, the lowest level since mid-January, the Labor
Department said.
It was the seventh straight week of decline in the four-week
average, which is considered a better gauge of underlying trends as
it irons out week-to-week volatility.
There were more encouraging signs, with the number of people
collecting long-term unemployment benefits dropping 98,000 to 5.92
million in the week ended October 10.
That was the lowest level since March and it was the first time
that continuing claims fell below the six million mark since
April.
This measure has trended lower for five straight weeks.
Analysts view this steady decline as an indication that
unemployment might be close to peaking, but it could also reflect
that many jobless workers have exhausted their unemployment
benefits.
"Even as we anticipate that the economy likely grew in the third
quarter, the excess slack in the system and employers' hesitance to
ramp up hiring appear likely to weigh on the labor markets for some
time," said Jim Baird, chief strategist at Plante Moran Financial
Advisors in Kalamazoo, Michigan.
The insured unemployment rate, which measures the percentage of the
insured labour force that is jobless, edged down to 4.5% in the
week ended October 10 from 4.6% the prior week, the department
said.
Another hopeful sign was provided by a Labor Department report that
showed the number of mass layoffs, defined as job cuts involving at
least 50 people from a single employer, fell by 129 to 2,561 last
month.
