NEW claims for US jobless benefits rose unexpectedly last week to the highest level since April, the government said overnight, underscoring concerns unemployment could scuttle the economic recovery.
Initial claims climbed 4.1 per cent to 479,000 in the week to July 31, the Labor Department said, baffling most analysts who had expected claims to fall to 455,000.
"The initial claims level was a clear disappointment,'' analysts at Briefing.com wrote to clients.
It reflects "a recovery that is losing steam,'' added economist Andrew Gledhill at Moody's Economy.com.
Initial claims ended 2009 around 450,000 and have not improved since then even as the economy emerged in the middle of last year from a brutal recession.
"With limited hiring by the private sector, it is becoming increasingly difficult for the recovery to be sustained,'' Gledhill said.
The previous week's jobless insurance claims were revised up slightly to 460,000 from 457,000.
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The four-week moving average for the claims, a less volatile indicator than the week-to-week figures, rose to 458,500 from the previous week's revised average of 453,250.
The latest data however showed a fall in the total number of Americans receiving unemployment benefits.
The number of insured unemployed during the week ending July 24 was 4.537 million, a decrease of 34,000 from the preceding week's revised level of 4.571 million.
"While I still believe these numbers are artificially high due to the constant extension of jobless benefits, the overall level should be lower even with this caveat,'' said analyst Andrew Busch of BMO Capital Markets.
The latest jobless weekly data came ahead of a key US Government report that most economists say is expected to show already high unemployment nudging up as firms remain reluctant to hire in large numbers.
They believe July saw non-farm payrolls fall by 87,000 and the unemployment rate edge up to 9.6 per cent, raising more doubts about the fragile economy recovery.
Although jobless claims reading is unlikely to affect the payroll numbers, which were gathered in an earlier survey, the markets are jittery, with shares mostly down.
"Markets are nervous right now about the state of the economy and are likely to give more weight to this number than we think is justified,'' said economist Ian Shepherdson of High Frequency Economics.
"We'll be worried if claims are still at this level in a couple of weeks' time, but for now we are curious rather than disturbed,'' he said.
Unemployment remains the biggest concern of President Barack Obama, who is facing an uphill battle to lift the fortunes of his Democratic Party in congressional elections in November.
Latest Government data showed economic growth easing to 2.4 per cent in the second quarter from a revised 3.7 per cent in the first three months of the year, stoking fears that recovery from recession is losing steam.
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