*NEWSD*U.S.:SEP 04 JOBLESS CLAIMS UP/2004-10-03

[Anonymous]

Jobless Claims Up, Consumption Flat

WASHINGTON (Sept. 04) -U.S.claims for jobless benefits jumped last week, while consumer spending was unexpectedly flat in August as shoppers closed their wallets after splashing out the previous month, the government said on Thursday.

But the dollar took the numbers in its stride, easing a touch against the euro but then pushing back, while 10-year Treasury bonds hovered.

The number of Americans seeking initial jobless benefits jumped by 18,000 but the entire rise was blamed on the effects of hurricanes that have battered the southern United States.

First-time claims for state unemployment insurance rose for the third straight week, climbing to 369,000 in the week ended Sept. 25 from a revised 351,000, the Labor Department said.

The rise defied Wall Street economists' expectations for a fall to 340,000 from the prior week's original measure of 350,000.

Labor said the storms — which now have been skewing the jobless claims data for weeks — have also affected the four-week moving average, closely watched by many economists as a more accurate barometer because it irons out weekly fluctuations.

The four-week average rose for the third straight week, rising to 343,500 from 341,250 in the previous week.

''The market focused on the jobless claims and we saw a little bit of pick-up in prices on the rise in jobless claims. It was fairly short-lived, but it still did help maintain the moderately firmer tone,'' said John Canavan, a strategist at Stone and Mccarthy Associates in Princetown, New Jersey.

INFLATION FLAT

Personal income and spending numbers on Thursday confirmed the underlying benign inflationary picture facing shoppers in the United States.

Spending was unchanged in August after climbing a revised 1.1 percent in July, the Commerce Department said. This had been initially reported as a 0.8 percent gain. Income picked up from July's tepid performance, posting a 0.4 percent rise compared with 0.2 percent the previous month.

Analysts polled by Reuters had forecast consumption to rise 0.1 percent and income to gain 0.3 percent after an increase in hours worked, with modest retail sales and a steep fall in auto sales forewarning of a slowdown in August spending.

The same report showed the PCE price index, one of the Federal Reserve's favorite measures of inflationary pressures, was unchanged in both July and August. On a 12-month basis the PCE price index has risen 2.1 percent. But the core measure, which excludes food and energy, was up just 1.4 percent.

Analysts expect a rebound in spending to underpin stronger growth in the second half of the year after the economy hit a soft spot earlier in the year.

''We had a fairly decent upward revision to July. That is important to generate some better numbers in the third quarter,'' said David Resler, chief economist at Nomura Securities International in New York.

''The overall level of spending is higher than we thought. The headline says weaker than expected but the upward revision more than makes up for that,'' he said.

U.S. second-quarter gross domestic product growth slowed to 3.3 percent from 4.5 percent the previous three months after soaring oil prices dented disposable income and took the shine off shopping.

As a result, this week's renewed advance in U.S. crude prices above $50 per barrel has rekindled concern that the economic expansion will be checked. Indeed, the International Monetary Fund on Wednesday forecast U.S. growth slowing to 3.5 percent next year after 4.3 percent in 2004.

* Post was edited: 2004-10-03 10:44:00

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June 23, 2013 at 9:51 PM