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August 20, 2009    

US jobless claims in surprise rise

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by Kay Murchie
US jobless claims in surprise rise

Government figures released today revealed a shock rise in the number of US workers filing new claims for jobless benefits.

The Labor Department said initial claims for state unemployment insurance benefits rose 15,000 to a seasonally adjusted 576,000 in the week ending August 15, up from 561,000 the previous week.

Linda Duessel, market strategist at Federated Investors in Pittsburgh, said: “I think that we’re hoping for the numbers to stay below 600,000, and not until we get below 500,000 can we be more certain that there is an economic recovery.”

The Dow Jones industrial average and the Nasdaq both lost ground following the news.

In other news for the world’s largest economy, it was announced earlier this week that US housing starts fell in the month of July ending three months of gains.

According to the Commerce Department, construction of new US homes fell 1% in the month to an annual rate of 581,000 properties.

However, there was a fifth straight monthly rise in single family home starts, increasing 1.7% compared with the previous month to an annual rate of 490,000 units - the highest level since October.

Meanwhile, applications for building permits, a barometer of future home construction, fell 1.8% to an annual rate of 560,000 units and were down 39.4% from a year earlier.

Despite hopes of a turnaround within the US economy, the housing market is still a long way from pre-recession levels. Housing starts in June were still almost 38% below levels seen in July 2008.

The housing market is key to a recovery and is one of the primary reasons the US is in the midst of its worst economic downturn in 70 years.

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