More Americans than forecast filed applications for unemployment benefits last week, signalling firings stepped up as the economy slowed.
Initial jobless claims rose by 2,000 to 484,000 in the week ended August 7, the highest level since mid February, Labor Department figures showed today in Washington. The number of people receiving unemployment benefits dropped, while those getting supplemental benefits surged by 1.34 million reflecting the government’s extension of eligibility.
Companies may be losing confidence in the recovery and are hesitant to hire, raising the risk of further erosion in consumer spending, the biggest part of the economy. Federal Reserve policy makers this week said growth “is likely to be more modest” than they previously projected, prompting central bankers to take additional steps to spur a rebound.
“There’s still considerable uncertainty about the economic outlook,” said David Resler, chief economist at Nomura Securities International Inc in New York. “Businesses are simply reluctant to put people on payrolls and are more willing to let them go. This week’s increase was more disappointing than what we’ve seen in recent weeks.”
Stocks dropped as the report added to evidence the world’s largest economy was slowing. The Standard & Poor’s 500 Index fell 0.8 per cent to 1,080.5 at 10:28 am in New York. Treasury securities were little changed after erasing earlier losses.
Economists forecast claims would fall to 465,000, according to the median of 42 projections in a Bloomberg News survey. Estimates ranged from 450,000 to 480,000. The government revised the prior week’s claims figure up to 482,000 from a previously reported 479,000.