WRAPUP 1-US jobless claims fall, Q2 productivty much weaker

* New jobless claims fall 6,000

* Second-quarter productivity revised to -1.8 pct rate

* Unit labor costs up 1.1 pct, fastest rate since Q4 2008

WASHINGTON, Sept 2 (BestGrowthStock) – New claims for U.S.
unemployment benefits fell last week, but were still too high
to signal a change in fortune for the troubled labor market.

Also underscoring the sputtering economic recovery was a
separate government report on Thursday showing non-farm
productivity fell more steeply than previously estimated in the
second quarter, posting its largest decline since the third
quarter of 2006.

Initial claims for state unemployment benefits dropped for
a second straight week, slipping 6,000 to a seasonally adjusted
472,000 in the week ended Aug. 28, according to data from the
Labor Department. Analysts polled by Reuters had forecast
claims edging up to 475,000.

“We’re still uncomfortably high, given where we are at this
juncture of the recovery, but that we’re moving towards 400,000
rather than 500,000 is indicative of at least some measure of
job creation,” said Mark Luschini, chief investment strategist
at Janney Montgomery Scott in Philadelphia.

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For a graphic on U.S. jobless claims, see
http://link.reuters.com/pug98n

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U.S. stock index futures edged higher on the claims data,
while Treasury debt prices extended losses. The U.S. dollar was
little changed.

Productivity — a measure of hourly output per worker that
is taken as an indicator of the economy’s vitality or lack of
it — contracted at an annual rate of 1.8 percent, instead of
the previously reported 0.9 percent pace. Analysts had expected
productivity to drop at a 1.9 percent pace in the April-June
period after increasing at a 3.9 percent rate the first
quarter.

Unit labor costs, a gauge of potential inflation pressures
closely watched by the Federal Reserve, rose at a 1.1 percent
rate rather than the previously estimated 0.2 percent. The
increase in unit labor costs was the fastest rate since the
fourth quarter of 2008. Unit labor costs fell at 4.6 percent
rate in the first three months this year.

RECOVERY UNDER THREAT

The claims data for last week has no impact on Friday’s
closely watched employment report for August as it falls
outside the survey period. However, filings for jobless
benefits were elevated last month, suggesting another decline
in payrolls.

The government is expected to report on Friday that nonfarm
payrolls dropped 100,000 in August, the third straight month of
job declines, with private sector employment increasing only
41,000, according to a Reuters survey. [ID:nN31235915]

The weak labor market threatens to derail the economy’s
recovery from the most painful recession since the Great
Depression. Growth is losing steam as the boost from a $814
billion government stimulus package and the rebuilding of
inventories by businesses fade.

The Fed has acknowledged the slowing recovery pace and
minutes of the U.S. central bank’s last policy meeting released
this week showed the economy’s outlook would have to
deteriorate “appreciably” to spur fresh support from the Fed.

Growing unease over the health of the economy is weighing
on President Barack Obama’s popularity and dimming the
Democratic Party’s prospects of keeping control of Congress in
November’s mid-term elections.

While weak data such as home sales and construction
activity indicate a further dampening in activity, modest gains
in consumer spending and manufacturing have convinced many
economists the economy is not double-dipping.

The economy grew at a 1.6 percent annualized rate in the
second quarter, slowing markedly from a 3.7 percent pace in the
January-March period.

Last week, the four-week average of new jobless claims,
considered a better measure of underlying labor market trends,
fell 2,500 to 485,500, the Labor Department said.

Claims for unemployment benefits have been stuck at lofty
levels for much of this year, which many economists say points
to unemployment staying uncomfortably high for some time.

The number of people still receiving benefits after an
initial week of aid fell 23,000 to 4.46 million in the week
ended August 21 from an upwardly revised 4.48 million the prior
week. Analysts polled by Reuters had forecast so-called
continuing claims slipping to 4.44 million.

The insured unemployment rate, which measures the
percentage of the insured labor force that is jobless, was
unchanged at 3.5 percent during that period.

The number of people on emergency benefits fell 281,676 to
4.55 million in the week ended Aug. 14.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

WRAPUP 1-US jobless claims fall, Q2 productivty much weaker