U.S. Jobless Claims Rose to Six-Year High

The number of Americans filing first- time claims for unemployment benefits unexpectedly rose recently to the highest level in six years, signaling the labor market continues to weaken. Initial jobless claims increased by 7,000 to 455,000 in the week ended Aug. 2, the most since March '02, from 448,000 the prior week. The number of continuing claims increased to a four- year high. Companies are reducing staff as demand slows and raw- material costs surge. Rising unemployment adds to concerns that consumer spending will falter in coming months after the effects of the government's tax rebate checks wane. Treasuries rose after the report, pushing yields lower.

Extended Benefits

Some workers filing for extended benefits under a government-spending bill that was signed by President Bush in June were deemed eligible to enter the program as first- time claimants, according to the Labor Dept. That may have contributed to the jump in applications over the last few weeks, he said. The government hasn't been able to quantify the impact on claims and applications may remain elevated for a few more weeks, according Labor. The 4-week moving average, a less volatile measure, rose to 419,500 from 392,750, the report showed. The unemployment rate among people eligible for benefits, that tends to track the jobless rate, was unchanged at 2.5%. 15 states and territories reported an increase in new claims, while 38 reported a decrease. These data are reported with a one-week lag.