Applications for U.S. unemployment benefits unexpectedly rose last week to the highest level since the end of June, underscoring the risk of further weakness in the labor market.
Jobless claims climbed by 11,000 to 428,000 in the week ended Sept. 10 that included the Labor Day holiday, figures from the Labor Department showed today in Washington. Economists surveyed by Bloomberg News projected a drop in claims to 411,000, according to the median forecast.
Bank of America Corp. (BAC) and Cisco Systems Inc. are among companies planning to keep trimming payrolls, raising the risk that consumer spending will stagnate. Signs the labor market is struggling to gain traction puts more pressure on President Barack Obama, lawmakers and the Federal Reserve for additional steps to spur the economy.
“Job growth is moving sideways, which is problematic,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “We really need the labor market to improve to generate the wages to support consumer spending.”
Weeks that include federal holidays typically show a decrease in unadjusted claims because there’s one less day to file. During the latest week, filings failed to drop as much as expected, resulting in a higher figure after seasonal adjustment, a Labor Department spokesman said as the data were released. He also said there wasn’t any effect on claims from Hurricane Irene.
The cost of living in the U.S. rose more than forecast in August as consumers paid more for food, energy and housing, the Labor Department also said. The consumer-price index increased 0.4 percent after a 0.5 percent gain in July. Costs minus fuel and food rose 0.2 percent for a second month.
A Federal Reserve Bank of New York report showed manufacturing in the region contracted at a faster pace in September. The Federal Reserve Bank of New York’s general economic index dropped to minus 8.8, the weakest reading since November, from minus 7.7 in August. Readings less than zero signal companies in the so- called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut, are cutting back.
Stock-index futures pared gains after the figures. The contract on the Standard & Poor’s 500 Index expiring in December rose 0.2 percent to 1,184.5 at 8:48 a.m. in New York after climbing 0.7 percent earlier.
Jobless benefits applications were projected to fall from the 414,000 initially reported for the prior week, according to the median forecast of 50 economists in a Bloomberg survey. Estimates ranged from 400,000 to 440,000.
Today’s data showed the four-week moving average, a less- volatile measure than the weekly figures, climbed to 419,500 last week from 415,500.
The number of people continuing to receive jobless benefits decreased by 12,000 in the week ended Sept. 3 to 3.73 million. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments rose by about 10,000 to 3.61 million in the week ended Aug. 27.
The unemployment rate among people eligible for benefits held at 3 percent in the week ended Sept. 3, today’s report showed.
Thirty-nine states and territories reported an increase in claims, while 14 reported a decline. These data are reported with a one-week lag.
Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.
Total payrolls were unchanged last month, the weakest reading since September 2010, and the unemployment rate held at 9.1 percent, the Labor Department said Sept. 2.
Obama announced his jobs plan before a joint session of Congress on Sept. 8, calling for an extension of a payroll-tax break for Americans and unemployment assistance. He also pushed for a payroll tax break for small businesses, an increase in infrastructure spending and more aid for cash-strapped state governments.
Bank of America, the biggest U.S. lender, will eliminate 30,000 jobs in the next few years as part of Chief Executive Officer Brian T. Moynihan’s plan to bolster profit and the firm’s stock. The reductions equal about 10 percent of the Charlotte, North Carolina-based company.
“We don’t have to be the biggest company out there, we have to be the best,” Moynihan said Sept. 12 at a New York investor conference. “We can get out of things we don’t need to do, make the company leaner, more straightforward, more driven.”