US jobless claims fall but recession still feared

WASHINGTON: Americans filed fewer new claims for jobless benefits last week, but the decline was not enough to dispel worries the economy was dangerously close to falling into a new recession.

Applications for unemployment benefits dropped to 423,000 in the week ending Sept.17 from an upwardly revised 432,000 the prior week, the Labor Department said on Thursday.

Analysts polled by Reuters had expected claims to fall last week to 420,000.

With fears mounting in the country that a new recession is at the door, the Federal Reserve on Wednesday warned of "significant" risks to the economy as it launched a new plan to boost growth through cheaper borrowing costs.

"(The data) suggests that job growth this month is probably not going to be stellar," said Rudy Narvas, and economist at Societe Generale in New York.

"It gives more backing to the Fed's decision yesterday to provide more stimulation. The economy is chugging along near stall speed."

Recession fears are growing around the world. Data in Europe and China on Thursday showed private sector business activity declined sharply this month as the euro zone debt crisis and a stalling US recovery hit confidence.

The Fed's warning and the weak data in Europe and China hammered global stock prices. US stock futures tumbled early Thursday on worriers about the global economy.

US JOBLESS CLAIMS STAY ABOVE 400,000

The four-week moving average of claims, which smooths out volatility, rose to 421,000 from 420,500 the prior week.

Excluding one week in early August, claims have held above 400,000 since early April. A Labor Department official said there was no discernible effect from Hurricane Irene or other recent storms in the national reading.

Continuing claims eased to 3.727 million in the week ending Sept. 10 from 3.755 million the previous week. The data showed that in the week ending Sept. 3, the number of total recipients on benefit rolls was 6.889 million.

Copyright Reuters, 2011