WASHINGTON (Reuters) - Total new claims for U.S. jobless benefits unexpectedly rose for the third consecutive week, the government said on Thursday, fanning worries about the health of the American labor market.
Initial applications for state unemployment insurance benefits, seen as a rough guide to the employment market and pace of layoffs, rose above the key 400,000 mark for the first time since early July, climbing by 8,000 claims to 403,000 in the week ended Aug. 24 from a revised 395,000 the prior week.
The rise pushed the four-week moving average to a seven-week high and defied Wall Street expectations for a fall to 387,000 from the 389,000 originally reported for the prior week. Economists view the 400,000 mark as the sign of a soft labor market.
U.S. Treasury bond prices posted gains on the news, which some economists said may bode ill for the August payrolls report due out next week.
"It looks like the troubles in the equity market have jolted business confidence and made employers reluctant to take on new workers," said Ram Bhagavatula, chief economist at Royal Bank of Scotland Financial Markets.
FEW EXTRAORDINARY FACTORS
A spokesman for the Labor Department said there were few extraordinary factors to explain the unexpected increase in claims other than a continuation of layoffs in the automobile industry from the previous week.
Over the past four weeks, new claims have averaged 392,750, up from 389,750 in the previous week and the highest since the 395,750 in the July 6 week.
The four-week moving average is viewed by economists as a more reliable indicator of the job market's state because its smoothes out volatility in the weekly measure.
In a sign jobs are hard to come by, the number of people staying on benefit rolls rose to 3.59 million in the week ended Aug. 17, the latest week for which figures are available.
"Continuing claims were up much more than anticipated," said Kevin Logan, an economist at Dresdner Kleinwort Wasserstain, adding that the "pool of unemployed is growing."
Next Friday's payrolls report should garner close attention from Federal Reserve policymakers as they weigh their next move on interest rates. The Federal Open Market Committee next meets on Sept. 24.
Joseph Lavorgna, a senior U.S. economist at Deutsche Bank Securities said: "I think we could see a pretty weak August employment report."
On Sept. 6, the Labor Department is expected to announce that the unemployment rate for August remained flat at 5.9 percent with 39,000 jobs created outside the farm sector. In July the economy created only 6,000 jobs.
"There's some evidence that things are recovering, but there are also reasons for concern and to the extent that the labor markets aren't responding in the way we might have hoped a few months ago, it's a little worrisome," said Lavorgna.
