New Unemployment Claims Rise; Dow Shudders, Freefalls 300 Points

September 4, 2008 2:43 p.m. EST

Washington, D.C. (AHN) - Initial figures for new unemployment compensation claims showed an increase of 15,000 from the previous week's revised figure of 429,000.

Labor Department officials had expected the number to fall, not rise.

For the week ending Aug. 30, U.S. Department of Labor officials say the advance figure for seasonally adjusted initial claims was 444,000.

The four week moving average was 438,000, which represented a decrease of 3,250 from the previous week's revised average of 441,250.

One bright spot was that the non-manufacturing service sector of the economy grew slightly in July. A figure above 50 represents growth and the Institute for Supply Management non-manufacturing index rose to 50.6 in August, up from 49.5 in July.

However, service jobs generally pay less than manufacturing jobs and frequently don't offer any benefit package. So the growth in that sector didn't help the nation's retailers that registered sluggish figures for much anticipated back to school sales.

Big box discounter Wal-Mart reportedly achieved higher August sales by offering heavy discounts to bargain hunting American consumers.

But American shoppers were struggling to cope with a 5.6 percent rise in their Consumer Price Index, the highest of any of the 30 nations that belong to the Organization for Economic Co-operation and Development.

The OECD released a report this week stating that the overall CPI rate for its member nations averaged 4.8 percent for the year to July, up from 4.4 percent to June, with the U.S. hardest hit at 5.6 percent while Japanese consumers were least affected at 2.3 percent.

Productivity is rising, while the cost of labor is dropping, which means no inflation for American businesses. But retail businesses might not benefit much as consumers tighten the belts and stop spending.

In economically hard-hit Florida, Tampa Bay-based Shell's seafood chain followed Sam Seltzer's Steakhouse into Chapter 11 bankruptcy, joining a growing list of businesses that have had difficulty staying profitable as consumers faced with rising fuel and grocery prices have less cash to spend on other things.

U.S. Labor Department officials said there hadn't been any change in the advance seasonally adjusted insured unemployment rate of 2.6 percent for the week ending Aug. 23 from the unrevised 2.6 percent figures.

So far this fiscal year, there have been 3.006 million individual unemployment benefit claims.