WASHINGTON – The number of U.S. workers filing initial claims for unemployment (search) aid rose for a third straight week last week, according to a government report Thursday showing unexpected weakness in the job market.
First-time filings for state jobless benefits rose 3,000 to 422,000 in the week ended Sept. 6, the Labor Department (search) said.
The increase, while slim, brought claims to their highest level since early July and defied predictions on Wall Street for a drop to 400,000 from the 413,000 originally reported for the Aug. 30 week.
Stock futures and the dollar fell after the report was released, while prices for U.S. Treasury securities (search) rose.
"It's surprisingly bad news," Moody's Investors Service chief economist John Lonski said. "This tells us that the very good news we had on consumer spending for the months of July and August will not last unless employment growth returns."
Further underscoring the evident weakness, a four-week moving average of claims, which smooths weekly volatility to provide a clearer view of layoff trends, climbed by 4,500 to 407,250, its highest level in six weeks.
Economists say claims of more than 400,000 suggest the labor market is deteriorating.
Tim Mazanec, a senior currency strategist at Investors Bank & Trust in Boston, called the report a worrying sign. "We seem to be back in the mode of job losses and that is picking up momentum here," he said.
The report showed jobless workers having a tough time finding new jobs. The number of unemployed on the benefit rolls after claiming an initial week of aid jumped by 61,000 to 3.67 million in the week ended Aug. 30 -- the highest since late June. A four-week average of that barometer also moved up.
While last week was shortened by the Labor Day holiday on Monday, a department spokesman said that appeared to have little impact on the claims figures, which are adjusted for seasonal factors. Economists often caution that holiday-shortened weeks can skew the numbers.
Numerous signs have suggested the U.S. economy is now growing robustly, but companies have continued to lay off workers and hold the line on hiring.
"This (report) shows that cost cutting is still driving the profits. Until we reverse that scenario, I am skeptical about the recovery," Mazanec said.
A report last week showing employers slashed 93,000 workers from their payrolls in August surprised economists, who had thought an unusually long period of labor market weakness was finally starting to wane.
August's job hemorrhaging brought the job-loss toll since the economy fell into recession in early 2001 to 2.8 million, including 1.1 million since the recession ended 21 months ago.
Corporate announcements on Wednesday underscored the tough time workers face. International Paper Co. said it was letting 3,000 workers go, 3Com Corp. said 1,000 jobs were on the block, and Levi Strauss said it was cutting 650 jobs. However, many of those layoffs are taking place overseas.