MercoPress. South Atlantic News Agency

US Jobless benefits jump to highest since November; markets tumble

Fears the economy is slowing down faster than forecasted

Claims for United States jobless benefits jumped to the highest level since November and Philadelphia-area manufacturing shrank for the first time in a year, indicating the US economy may be slowing faster than forecast.

The number of unemployment claims unexpectedly shot up by 12,000 to 500,000 in the week ended Aug. 14, Labour Department figures showed Thursday in Washington. The Federal Reserve Bank of Philadelphia’s general economic index turned negative in August, signalling contraction.

Stocks dropped, led by declines in the largest U.S. companies including 3M Co., General Electric Co and Boeing Co. expressing fears they could be hurt by a slowdown in the recovery from the worst recession since the 1930s. A lack of jobs raises the risk that consumer spending will weaken further, just as manufacturing, which led the rebound, shows signs of stumbling.

The Standard & Poor’s 500 Index fell 1.7% to 1,075.63; Dow Jones was down 1.39% and Nasdaq, 1.66.

Another report showed the index of leading indicators increased 0.1% in July after dropping 0.3% the prior month. The New York-based Conference Board’s gauge, which measures the economic prospects over the next three to six months, has shown a see-saw pattern over the past four months that indicates slower growth through the end of the year.

The Fed Bank of Philadelphia’s factory index fell to minus 7.7 this month, the lowest reading since July 2009, from 5.1 in July. Economists projected it would increase to 7. The area covers eastern Pennsylvania, southern New Jersey and Delaware.

The bank’s measures of orders and shipments dropped, mimicking the results of a Fed Bank of New York report earlier this week that showed bookings and sales also decreased in its region. The bank’s so-called Empire State Index increased less than forecast as a result.