WASHINGTON New claims for U.S. unemployment benefits unexpectedly climbed to a nine-month high last week, providing yet another setback to the economic recovery.
Initial claims for state unemployment benefits increased for a third straight week, rising 12,000 to a seasonally adjusted 500,000 in the week ended August 14, the highest since mid-November, the Labor Department said Thursday.
Analysts polled by Reuters had forecast claims slipping to 476,000 from the previously reported 484,000 the prior week, which was revised up to 488,000 in Thursday's report.
The claims data reinforced concern that a U.S. economic slowdown risked pushing the global economy close to renewed recession.
"If the (U.S.) economy is going down, there's no way the euro zone can withstand the slowdown," said Win Thin, senior currency strategist for Brown Brothers Harriman in New York.
"It's too early to say we're headed for a double dip, but things are slowing," he added.
A Labor Department official said there were no unusual factors affecting the state level data which covered the survey week for the government's closely watched employment report for August, scheduled for release early next month.
"There are some technical factors out there and the seasonal factors seem to be pushing it up a little bit. But given the trend of claims it looks like the economy ran into a wall in August," said Chris Rupkey, chief financial economist at Bank of Tokyo-MitsubishI UFJ in New York.
U.S. stocks opened lower after the report, while Treasury debt prices pared losses and the U.S. dollar fell against major currencies.
A 9.5 percent unemployment rate and weak housing market are hobbling the U.S. economy's recovery from its most brutal recession since the Great Depression.
UNEMPLOYMENT A POLITICAL CHALLENGE
The economy's poor health has handed President Barack Obama a tough challenge and put at risk the Democratic Party's majorities in the U.S. House of Representatives and Senate in November's mid-term Congressional elections.
Obama's approval ratings have tumbled to near 40 percent and Congressional Democratic ratings are around 20 percent.
There were other mixed measures of economic activity from major retailers on Thursday, with Sears Holdings Corp. (SHLD.O) reporting a wider-than-expected quarterly loss as consumers curbed spending. The company blamed a lackluster performance on weak food sales and reduced demand for lawn and garden products, tools and consumer electronics.
But office products company Staples Inc (SPLS.O) reported a higher quarterly profit, meeting expectations, and said it expects modest economic recovery during the rest of the year.
JOBLESS CLAIMS NOT LOW ENOUGH FOR JOB GROWTH
The four-week average of new jobless claims, considered a better measure of underlying labor market trends as it irons out week-to-week volatility, rose 8,000 to 482,500, the highest since early December.
Claims for unemployment benefits have been stuck at lofty levels for much of this year, which many economists say points to unemployment staying uncomfortably high for some time.
Weekly claims have not come down close to the 400,000 level that most analysts generally view as the dividing line between payrolls growth and contraction. Payrolls grew in the first five months of this year, partly due to hiring for the decennial census, but have declined in both June and July.
The economy grew at a 2.4 percent annualized rate in the second quarter, much slower than the 3.7 percent pace in the first three months of the year.
However, recent trade and business inventory data have indicated a much more sluggish pace. According to a preliminary Reuters survey, the government could lower the second-quarter growth estimate to a rate of about 1.4 percent when it publishes its first revision next Friday.
However, the number of people still receiving jobless benefits after an initial week of aid fell 13,000 to 4.48 million in the week ended August 7 from an upwardly revised 4.49 million the prior week. Analysts polled by Reuters had forecast so-called continuing claims rising to 4.50 million from a previously reported 4.45 million.
"The drop in continued claims is an encouraging sign," said Robert Dye, senior economist at PNC Financial Services in Pittsburgh.
"When you take the life signs on the labor market, it's not all bad news, but it's not where we would like," he added.
The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, was unchanged at 3.5 percent during that period.
The number of people on emergency benefits increased 260,105 to 4.75 million in the week ended July 31.