Jobless claims to U.S. leading index add to weakness

More Americans than forecast filed claims for unemployment benefits and an index of leading indicators declined for second time in three months, adding to signs of weakness in the world’s largest economy.

Jobless claims decreased by 3,000 in the week ended Sept. 15 to 382,000, Labor Department figures showed today (Sept. 20) in Washington. The median forecast of 49 economists surveyed by Bloomberg projected 375,000. The New York-based Conference Board’s gauge of the outlook for the next three to six months fell 0.1% after a 0.5% increase in July.

Companies are holding back on hiring and investment as overseas demand cools and the prospect of tax increases and spending cuts in the U.S. threatens growth. At the same time, the Bloomberg Consumer Comfort Index climbed to a seven-week high, helped in part by stock-market gains that may offer more support for the household spending that accounts for 70% of the economy.

Today’s figures are “consistent with modest growth — we’re not going into recession, there’s no sort of sign that activity is weakening substantially,” said Jeremy Lawson, senior U.S. economist at BNP Paribas in New York. “But there’s no sign of shifting into a higher gear, either.”

U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for the third time in four days, as the U.S. data, combined with reports from Europe and Asia, reinforced concern the global slowdown is worsening.

The S&P 500 lost 0.3% to 1,456.24 at 12:31 p.m. in New York. The yield on the 10-year Treasury note fell to 1.75% from 1.77% late yesterday.

Estimates for U.S. jobless claims in the Bloomberg survey ranged from 360,000 to 390,000. The Labor Department revised the previous week’s figure to 385,000 from an initially reported 382,000. Last week’s data covered the period surveyed by the government to calculate the September employment data.

The pace of hiring took a tumble last month. Payrolls rose by 96,000 workers in August after a revised 141,000 increase in July that was smaller than initially estimated, the Labor Department said on Sept. 7.

The lack of progress in the labor market persuaded the Federal Reserve to announce further accommodation last week. The Fed said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month as it seeks to boost growth and reduce unemployment.

Companies from Norfolk Southern Corp. to FedEx Corp. are reducing profit forecasts as the slowing economy reduces demand for everything from shipments of commodities to overnight express envelopes.

At the same time, manufacturers were more optimistic about the next six months as the Philadelphia Fed’s future index climbed to 41.2, the highest since January, from 12.5.
Consumer confidence is also making headway. Americans’ view of the economic outlook improved in September as stock prices rallied to a five-year high, according to the Bloomberg Consumer Comfort survey.