WASHINGTON, Aug 7 (AP): The number of newly laid off people signing up for jobless benefits last week unexpectedly climbed to its highest point in more than six years as the faltering economy forced companies to cut back.
The Labour Department reported Thursday that new applications filed for unemployment insurance rose by a seasonally adjusted 7,000 to 455,000 for the week ending August 2. The increase left claims at their highest level since late March 2002.
A programme to locate people eligible for jobless benefits played a role in the increase, a Labour Department analyst said. However, the analyst couldn't say how much of a role.
The latest snapshot of layoff filings was worse than analysts expected. They were forecasting new claims to drop to around 430,000.
The data disappointed Wall Street and the White House. The Dow Jones industrials fell more than 100 points in morning trading.
"The job market isn't strong right now as we work through the downturn in housing and high energy prices. We would like to see more job creation," said White House spokesman Tony Fratto. He credited the government's stimulus programme as a helpful cushion.
With layoffs rising and new jobs harder to find, there's growing worry that consumers will retrench later this year as the fortifying impact of the government's tax rebates disappear - spelling more trouble for the economy.
Wal-Mart, the world's largest retailer, and Costco Wholesale Corporation reported solid sales for July. However, Wal-Mart's sales came in a bit below Wall Street forecasts. The company noted that shoppers are increasingly running out of money and projected that sales would slow in August as rebate checks dry up.
Many apparel stores including Limited Brands Inc, Abercrombie & Fitch Co. and Pacific Sunwear of California remained in a malaise.
On the layoffs front, the new filings for unemployment benefits were distorted somewhat by the outreach programme to notify people that they could qualify for additional benefits under a new law.
Meanwhile, the four-week moving average of claims, which smooths out weekly fluctuations, rose to 419,500 last week, the highest since mid-July 2003.
