WASHINGTON (Reuters) — The number of Americans filing new claims for unemployment benefits rose last week, suggesting little improvement in the labour market this month after employment stumbled badly in May.
Initial claims for state unemployment benefits climbed 9,000 to 429,000, the Labor Department said Thursday. Economists had expected claims to come in at 415,000.
The report was the latest in a long-running series of data to underscore the lingering weakness in the U.S. recovery and came a day after the Federal Reserve gave a gloomier assessment of the economy.
The claims report covers the survey period for the government's closely watched data on non-farm payrolls for June, which will be released July 8. Claims increased 15,000 between the May and June survey periods, implying another soft month for jobs after a modest 54,000 gain in employment in May.
"The labour market remains in a funk, it doesn't seem like it has improved much this month and the rise in claims will keep expectations for June non-farm payrolls in check," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Penn.
The Labor Department said it estimated claims for six states because of technical problems. Economists said even if claims had been overstated as a result, that would not change the view that they were too high to be consistent with either stronger economic growth or hiring.
A separate report highlighted one of the weakest spots: housing. The Commerce Department said new single-family home sales fell 2.1 percent to an annual rate of 319,000 units in May. A report on Tuesday had shown sales of previously owned homes, a larger segment of the market, fell 3.8 percent.
Stocks on Wall Street fell sharply, with all three indices down more than 1 percent at midday, weighed down by the data and economic fears sparked by an International Energy Agency decision to release emergency oil stockpiles.
Prices for government debt rose and the dollar advanced against a basket of currencies.
Second half revival still expected
Even as it cut growth forecasts and downgraded its view of the labour market, the Fed Wednesday said the economic slowdown should be temporary.
It gave no hint of further monetary support and confirmed it would shutter its US$600 billion bond-buying program at the end of June.
Like the Fed, economists are cautiously optimistic that the recovery will regain momentum by the third quarter.
The decision to release 60 million barrels of oil from stockpiles held by industrialized oil-consuming nations, which brought prices down sharply, should help ease the pressure on consumers and bolster the recovery.
High gasoline prices are one of the factors that have weighed on growth. Benchmark Brent crude fell more than US$8 to about US$105.72 a barrel at one point Thursday.
U.S. gasoline prices have already moved lower from their peak of US$4.02 a gallon in early May, a drop analysts say should start paying a dividend for the economy in the third quarter.
Separately, the Chicago Federal Reserve's national activity index stayed in negative territory for a second straight month in May, indicating the economy continues to grow below trend.
"The soft patch has a little bit further to run, probably another month or two, then we are expecting in the second half of the year ... for there to be something of a pick-up. Not a boom, but pick-up," said Leo Abruzzese, global forecasting director at the Economist Intelligence Unit in New York.
Last week's rise in initial claims left them well above the 400,000 mark for an 11th consecutive week. Analysts normally associate that level with a stable labour market.
The four-week average of new jobless claims, considered a better gauge of labour market trends, was unchanged.
The number of people still receiving benefits under regular state programs after an initial week of aid in the week ended June 11 was also little changed.