New jobless claims rise; Americans' spending jumps

WASHINGTON – First-time claims for jobless benefits increased more than expected last week, a sign employers are reluctant to hire and the job market remains weak.

And even though consumer spending jumped by the most in nearly eight years in August, due partly to the government's Cash for Clunkers program, economists question whether the improvement can be sustained. They note that households face rising unemployment, tight credit conditions and other obstacles.

The Labor Department said Thursday that initial claims for unemployment insurance rose to a seasonally adjusted 551,000 from 534,000 in the previous week. Wall Street economists had expected an increase to 535,000, according to a survey by Thomson Reuters.

The increase comes after three weeks of declines. Weekly claims have been trending down since the spring, but the decline has been painfully slow. The four-week average, which smooths out fluctuations, dropped to 548,000, about 110,000 below its peak in early April.

"This is a bit disappointing but not unduly alarming," Ian Shepherdson, chief U.S. economist for High Frequency Economics, wrote in a note to clients. The increase "leaves the downward trend in claims intact."

Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies' willingness to hire new workers. Many economists say initial claims below 400,000 would be a signal that employers are adding to the net total of jobs.

...

The number of people remaining on the rolls, meanwhile, fell 70,000 to 6.09 million, the lowest level since the week of April 4.

...

Continuing claims have declined slowly from a record level of 6.9 million in late June, "suggesting that the unemployment rate is near its peak," Abiel Reinhart, an economist at JPMorgan Chase, wrote in a note to clients

.