U.S. Unemployment Claims Rise, As Job Market Stagnates

unemployment numbers JuneBy Lucia Mutikani and Steven C. Johnson

U.S. manufacturing grew at its slowest pace in 11 months in June and the number of Americans filing new applications for unemployment aid fell slightly last week, further evidence that the economy was weakening.

Other reports on Thursday underscored the difficulty the economy was having breaking out of a soft patch. Factory activity in the Mid-Atlantic region tumbled to a 10-month low in June and home resales slipped in May.

"Today's numbers are ugly. The economy is in another mid-year slump, growth will struggle to breach 2 percent and the odds are rising that the Fed will need to do more, probably as soon as its August meeting," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Penn.

The Federal Reserve on Wednesday moved to hold down borrowing costs by extending a program to re-weight securities it holds toward longer maturities. However, many economists think it will eventually launch a third round of bond purchases in a more aggressive bid to spur a stronger recovery.

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The economy is going through a repeat of 2011 when growth stumbled in summer, with Europe's debt crisis and uncertainty over the course of U.S. fiscal policy making businesses reluctant to hire.

Financial information firm Markit said its U.S. "flash" manufacturing gauge fell to 52.9 in June from 54 in May. June's reading was the lowest since last July although it stayed above 50, indicating an expansion in activity.

For the second straight month, weaker demand from Europe and large emerging markets such as China dented sales. Markit said U.S. manufacturers reported the second largest decline in new export orders since September 2009.

Job Market Stagnating

In a separate report, the Labor Department said initial claims for state unemployment benefits slipped by 2,000 last week to a seasonally adjusted 387,000. However, a four-week moving average, considered a better measure of labor market trends, hit the highest level since early December.

The claims data covered the survey week for the government's nonfarm-payroll count for June and pointed to only a marginal improvement on the paltry 69,000 jobs added in May.

"The labor market is appearing to be losing further momentum, with the economy likely to add jobs at a very modest pace in June, possibly within the 100,000 to 150,000 range," said Millan Mulraine, senior macro-strategist at TD Securities in New York. "This is likely to be well below the pace at which the Fed will feel sufficiently confident that the current economic recovery could be sustained."

The Labor Department will release its June employment report on July 6.

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In a third report, the Philadelphia Federal Reserve Bank reported that factory activity in eastern Pennsylvania, southern New Jersey and Delaware contracted for second month in June.

Stocks on Wall Street fell on the data, while prices for U.S. government bonds rose. The dollar strengthen against a basket of currencies.

Manufacturing has been one of the strongest links in an otherwise frail U.S. economic recovery, but weaker overseas demand may be starting to take its toll.

Both the Markit index and the Philadelphia Fed survey showed weakness in employment measures.

"The close fit of the survey data with non-farm payroll numbers suggests that the official (employment) data for June will show a further weakening of the labor market," said Markit chief economist Chris Williamson.

Labor market weakness was key in the Fed's decision on Wednesday to extend its so-called Operation Twist program through the end of the year. It was due to expire this month.

In a relative bright spot, a gauge of future U.S. economic activity rebounded in May.

Sales of previously owned homes fell 1.5 percent last month. The drop followed April's hefty 3.4 percent increase and the median home price in May rose for a fourth straight month.

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I like how the media (not necessarily this article) keeps talking about how things are going during the "recovery" from the recession of a few years ago.

There never has been a recovery. It's all liberal BS.

June 22 2012 at 6:03 AM Report abuse rate up rate down Reply

And here I thought because Obama said the employment situation was improving it was. LOL Get this jerk out asap

June 22 2012 at 5:53 AM Report abuse rate up rate down Reply

The job market is not stagnated---it's virtually non-existent, just as the economy is.

June 22 2012 at 5:29 AM Report abuse rate up rate down Reply

I sincerely hope people will get out and VOTE this election cycle and start taking America back from the Chinese, Mexicans, Saudis, Koreans, deadbeats, governmental leeches, corporate theives, lawyers and everyone else that is ******* this country dry. Get out there and VOTE people and make sure that the theif you vote out of office, stays out of office!

June 22 2012 at 12:59 AM Report abuse +3 rate up rate down Reply
2 replies to Michael's comment

If these people you're referring to are legal immigrants or US citizens, then there's no problem. The REAL problem is sitting in the Oval Office. Get rid of him, and maybe the country can heal and get back on its feet.

June 22 2012 at 5:32 AM Report abuse rate up rate down Reply

It's tough to want to vote if your vote doesn't count. Dang system is set up so you believe it counts and follow the rest of the sheep as corporations buy the elections once again. Besides dem's and republicans both are the same thing. They both block each other on anything important to the people ,but quickly agree when passing laws thart remove our freedom like the NDAA,NDRP,ACTA, trespass bill. CISPA and other future stuff like SOPA/PITA. They all or mostly have to go. Occupy was right.. The top .001% they have to go. Bring the end to crony capitalism.

June 22 2012 at 6:15 AM Report abuse rate up rate down Reply

Obama will fix it, have no fear.

June 21 2012 at 11:37 PM Report abuse -6 rate up rate down Reply
2 replies to surffmaster's comment

He's going to need to now that Meg "Right wing dirtbag" Whitman just canned 30,000 workers from HP!!

June 22 2012 at 2:55 AM Report abuse rate up rate down Reply


June 22 2012 at 5:32 AM Report abuse rate up rate down Reply

Not to worry. When Obama is done campaigning in all 57 States, the people will believe him again.

June 21 2012 at 11:27 PM Report abuse +5 rate up rate down Reply
Dave's Back

Damn... Can't a bro get a break. 3 weeks in a row.. NO Bama has gone to crap. Bye, bye. Obama

June 21 2012 at 10:41 PM Report abuse +7 rate up rate down Reply

No Problem...Obama needs all the help from accross the border he can get to be re-elected. Jobs to Americans mean nothing to him...let the 700,000 plus have them he gave a pass to...then who knows how many more million are here. Before you know it the new language on the USA will be Spanish

June 21 2012 at 10:32 PM Report abuse +6 rate up rate down Reply
2 replies to harkone75's comment

It just ticks me off that at an ATM I have to choose English. If I call a company and it's an automated system, I have to choose to proceed in English! I'm not asked if I want Korean, Russian, Japanese, etc. but I sure as h*ll am asked if I want Spanish!!! I heard the actual number of illegal aliens he's giving free reign to America's resources and taxpayer money is 1.4 million! We have got to get him out of there! Have you seen the video he made addressed to African-Americans regarding voting for him? If Romney had made a video telling Caucasian-Americans they needed to vote for him, Oafbama would have had a fit!!!

June 22 2012 at 1:05 AM Report abuse +4 rate up rate down Reply
1 reply to uncommonsensesc's comment

Maybe one of the reasons your not asked about Korean Russian Japanese is because they never had a hand in the game Spanish was spoken on this land long before English was

June 22 2012 at 3:02 AM Report abuse rate up rate down

Nothing new about Spanish on this land go back to wherever your ancestors are from and speak whatever language you like otherwise get used to it

June 22 2012 at 2:58 AM Report abuse rate up rate down Reply
Let's Go Fishing

You have got to be kidding me.... Didn't O say we were bouncing back... What a waste of office space.

June 21 2012 at 10:29 PM Report abuse +6 rate up rate down Reply

Don't fret . Obama assured us everything is fine :)

June 21 2012 at 10:24 PM Report abuse +2 rate up rate down Reply

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