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Jobless Claims Increase by 12,000

The latest figures reported from the Labor Department show a steep increase of 12,000 US workers seeking unemployment benefits to 321,000 people. This has come as a surprise as Wall Street estimates were talking about figures around 308,000-310,000. Mark Zandi, chief economist at Moody`s Economy.com says: "So far, jobless claims remain extraordinarily low despite a rapidly deteriorating housing market and a weakening manufacturing sector."

During October unemployment dropped to 4.4%, due to the creation of 92,000 jobs. Officials at the Federal Reserve considering whether or not to raise interest rates should consider a tight labor market`s effects on wage pressures. Several financial experts believe that the slow down in US growth in this year`s third quarter could damage the labor market in the coming months. "The weekly initial claims data are a little worse than expected," Action Economics reported to its clients. "(This) suggest some risk to our 135,000 forecast for non-farm payrolls. The data could add downside pressure on the dollar and yields amid thin trading." November`s jobs situation will be reported on Dec. 8.

The Mortgage Bankers Association reported that US mortgage applications dropped 3.7% to 623.6, the lowest rate since January. The combination of a cooling housing market and the rising unemployment rates together with other data has raised fears of an economic slowdown. Many exports believe that the Federal Reserve will be forced to cut interest rates next year to cope with the potentially weakening economy.