Striking Verizon workers boost US jobless claims

The number of Americans claiming new jobless aid rose last week due to a strike at Verizon Communications, but there was little evidence the recent stock markets turmoil had spooked businesses enough to cut workers. Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 417,000, the Labour Department said on Thursday.
--- Weekly jobless claims rise to 417,000
--- Four-week moving average up 4,000
While the level suggests the job market is still having trouble gaining momentum, it falls well short of a recession signal. "The encouraging news is that despite all the negative news we have had in August, the pace of layoffs has held steady," said Omair Sharif, an economist at RBS in Stamford, Connecticut. "The data flow really isn't consistent with a recessionary environment."
Striking Verizon workers filed 8,500 claims for jobless benefits last week, after submitting 12,500 applications the previous week, which covered the period for the August nonfarm payrolls survey. That implies the strike, which involved 45,000 workers and has ended, would have a negative affect on the payrolls count to be released on September 2.
The department will provide a more definitive reading of the strike's impact in its monthly strike report on Friday. Striking workers are not eligible for jobless benefits. "If we remove these striking workers, claims would have increased about 10,000 to 409,000 between the weeks ending August 13 and August 20, showing improvement relative to the July labour market survey week," said Daniel Silver, an economist at J.P. Morgan in New York.
Economists had forecast claims at 405,000 last week. Prices for US government debt rose as investors still viewed the rise in claims as negative for the economy. A sharp drop in Apple Inc shares following the resignation of co-founder Steve Jobs as chief executive hit US stocks.
Fears the economy is on the brink of slipping back into recession have rattled stock markets, helping to dampen business and consumer confidence. Regional manufacturing surveys so far for August have shown deterioration in sentiment. In contrast, so-called hard data ranging from industrial production, durable goods orders to retail sales generally point to an economy that continues to expand, although at a very tepid pace. "There is no recession yet," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ.
Rupkey said the data, coming head of the annual central bank conference in Jackson Hole, Wyoming, was important as Federal Reserve Chairman Ben Bernanke "originally dubbed jobless claims the 'timeliest' of economic indicators at Jackson Hole in 2007." Bernanke is unlikely to offer plans for a monetary stimulus and could instead outline gradualist measures, such as how the US central bank could tweak its balance sheet as a way to put further downward pressure on medium- and long-term interest rates.
While the labour market regained some ground in July, a new wave of layoffs especially centred in the financial sector, coupled with the deterioration in business sentiment, could reverse the trend in the months ahead. Bank of America Corp plans to cut 3,500 jobs this quarter. Employers added 117,000 new jobs in July after increasing payrolls by only 99,000 in May and June combined.
The four-week moving average of claims, considered a better measure of labour market trends, rose 4,000 to 407,500. The number of people still receiving benefits under regular state programs after an initial week of aid fell 80,000 to 3.64 million in the week ended August 13 - the lowest since September 2008. Data for the so-called continuing claims covered the survey period for the household survey from which the unemployment rate is derived. The unemployment rate fell to 9.1 percent from 9.2 percent in June.