Home sales at 10-year low, jobless claims jump

Jobless claims jumped last week and the pace of existing home sales tumbled to a 10-year low as slowing growth hit hiring and a glut of unsold homes weighed on the real estate market, data on Thursday showed.
The number of U.S. workers filing new claims for jobless benefits jumped 34,000 last week, the Labor Department said, in part reflecting seasonal volatility typical at this time of year, but also indicating that jobs were hard to find.
A separate report from the real estate industry said that home sales dropped 2.6% in June, dragging the annual sales pace to the lowest since early 1998.
Government bonds, which benefit from signs of economic weakness, extended gains on the data while the dollar lost ground against the euro and yen. The Dow Jones Industrial Average was down more 1%.
Sliding house prices and mounting losses from the subprime mortgage market sparked a credit crunch last year that has chilled growth and hiring, despite aggressive interest rate cuts by the Federal Reserve.
"The message from claims is that unemployment is still rising," said James O'Sullivan, economist at UBS Securities in Stamford, Connecticut.
Initial claims for state unemployment insurance benefits rose to a seasonally adjusted 406,000 in the week ended July 19, from a revised 372,000 the prior week, the Labor Department said. It was the highest reading since late March and above forecasts of 376,000 new claims.
A Labor Department official noted that estimates were being impacted by annual auto plant shutdowns, the end of the quarter, and the shorter July 4 holiday reporting week.
The four-week average of new jobless claims, a better gauge of underlying labor trends because it irons out week-to-week volatility, rose to 382,500 from 378,000.
"The average is still hanging right around that 375,000, which denotes a slow-growth economy, a pretty flat economy, not quite a recession," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.
The number of people remaining on the benefits roll after drawing an initial week of aid declined 9,000 to a lower-then-forecast 3.107 million in the week ended July 12, the most recent week for which data is available.
Analysts estimated so-called continued claims would be 3.14 million. It was the 13th straight week that claims were above 3 million, in a sign that the slowing economy is making it harder to find jobs.