Unemployment claims rise

WASHINGTON (AP) — The number of newly laid-off workers seeking jobless benefits rose last week, though the government said its report again was distorted by the timing of auto-plant shutdowns.

Unemployment insurance claims have declined steadily since the spring, but most private economists and the Federal Reserve expect jobs to remain scarce and the unemployment rate to top 10 percent by year-end.

Elsewhere, the housing market showed more signs of life as sales of previously occupied homes rose for the third-straight month in June, according to the National Association of Realtors. That helped push the Dow Jones industrials above 9,000 for the first time since early January.

The Labor Department said Thursday that its tally of initial claims for unemployment insurance rose by 30,000 to a seasonally adjusted 554,000. That was above analysts’ estimates of 550,000.

The increase follows two straight weeks of sharp drops, largely because automakers didn’t lay off as many workers as expected in early July. General Motors and Chrysler temporarily shut down many of their plants earlier than usual this year, in May and June, after filing for bankruptcy protection and restructuring their companies.

A department analyst said the government’s seasonal adjustment process expected claims to drop sharply last week, after the normal pattern of auto layoffs was complete. But that didn’t happen, causing seasonally-adjusted claims to rise.

Still, some economists saw positive signs in the report. The four-week average of claims, which smooths out fluctuations, dropped to 566,000, its lowest level since January.

“The trend in jobless claims is still downward,” Joseph Lavornga, chief U.S. economist at Deutsche Bank, wrote in a note to clients.

But Lavornga also said the unemployment rate likely will keep rising as long as initial claims remain above 400,000. He expects the jobless rate to increase to 9.6 percent this month, from a 26-year high of 9.5 percent in June.

On the housing front, home sales rose more than expected to a seasonally adjusted annual rate of 4.89 million last month, from a downwardly revised pace of 4.72 million in May. Home sales last rose for three straight months in early 2004, during the housing boom.

But prices are expected to keep falling well into next year because of a backlog of foreclosures that have yet to come on to the market. The median sales price was $181,800 last month, down 15 percent from last year but up from $174,700 in May.

The recession, which started in December 2007 and is the longest since World War II, has eliminated a net total of 6.5 million jobs.