WASHINGTON — Americans filing first-time claims for unemployment benefits rose last week to the highest level in almost four months, a sign the slowing economy is weakening the labor market.
Initial jobless claims increased by 34,000 to 406,000 in the week ended July 19, from a revised 372,000 the prior week, the Labor Department said Thursday. The filings exceeded economists’ forecasts and were the most since 406,000 in the week ended March 29.
U.S. employers are reducing workers as surging fuel costs, a three- year housing slump and a crisis in credit markets restrain demand. Rising joblessness reinforces concern that consumers will pull back on spending, which accounts for more than two-thirds of the economy.
“The underlying picture is one of a labor market that is weak,” said David Sloan, senior economist at 4Cast Inc. in New York, whose forecast of 410,000 was the closest to the actual number in a Bloomberg News survey of 44 economists.
“The economy is growing slowly so you tend to see job losses rising. The weakness could increase further in coming months.”
Home resales dropped 2.6 percent last month, according to the National Association of Realtors — more than double the anticipated 1 percent drop.
The last time weekly claims exceeded last week’s total was in September 2005, just after two hurricanes on the U.S. Gulf Coast threw thousands out of work.
Initial claims were estimated to increase to 380,000 from 366,000 initially reported for the prior week, according to the median projection of 44 economists in a Bloomberg News survey. Estimates ranged from 365,000 to 440,000.
Weekly jobless-claims figures can be difficult to interpret in July, the month automakers temporarily trim staff to upgrade factories in preparation for new car models. Affected auto workers who are not eligible for vacation pay can apply for jobless benefits.
The four-week moving average increased to 382,500 from 378,000, Thursday’s report showed.
People continuing to collect jobless benefits fell to 3.107 million in the week ended July 12, from 3.116 million the previous week.
Economic fallout
What’s happening: Unemployment claims bolted higher and home prices recorded one of their steepest drops on record.
Vicious cycle: As home prices sink, foreclosures rise, banks lend less and employers cut jobs.
Impact: With companies laying off workers, new jobs hard to find and home prices falling, consumer spending is further in jeopardy.
