U.S. jobs and store sales soft but homes data brighter

By Alister Bull

WASHINGTON (Reuters) - New claims for U.S. jobless aid rose last week and big retailers had disappointing sales in July, reports showed on Thursday, but a gauge of future home sales rose in a hopeful sign for the battered housing sector.

The higher-than-expected June signings of home sale contracts offered some hope the housing market may be stabilizing. But the jobless claims and Wal-Mart's weaker-than-expected July sales boosted concerns about consumer spending and the corporate profit outlook, sending U.S. stocks lower and U.S. government bond prices higher.

Initial claims for state unemployment benefits rose 7,000 last week to 455,000, the highest in six years, the Labour Department said. But it said a new federal program to extend benefits was partly to blame for the elevated level.

Still, the four-week moving average of claims, designed to iron out weekly fluctuations and provide a better view of the underlying trend, also showed that jobs were tough to find as the economy copes with the worst housing downturn since the Great Depression.

"Look past the choppiness and bias in the data and what you'll see is a fundamental weakness in the Labour market," said Michelle Meyer, an economist at Lehman Brothers in New York.

"We'll see the unemployment rate peaking at 6.3 percent next year," she said. It hit 5.7 percent in July.

The four-week average of new claims jumped to 419,500 from 392,750 the previous week. This was the highest since July 2003 and the first time since that year that the four-week moving average breached 400,000 -- a threshold linked with recession.

CONSUMERS LOSING SUPPORT  Continued...