US jobless figures set to raise fears of double dip

Investors are bracing themselves for another grim snapshot of the US labour market today, when the government is expected to confirm that unemployment is again on the rise.

The release of monthly US employment data has become a touchstone for global financial markets, which are looking for clues as to whether the world's largest economy might slide into a double-dip recession.

The consensus of economists' forecasts is that the US shed 80,000 jobs in August, with public-sector employment being particularly hard hit because of budget problems for many of the 50 states.

And the overall unemployment rate is forecast to rise from 9.5 per cent in July to 9.6 per cent – potentially dealing a psychological blow to consumer confidence.

Yesterday, the US labour department said there were 472,000 new claimants for jobless benefits last week, 6,000 fewer than the previous week but still higher than the average for the year to date.

Economists have been downgrading their forecasts for US GDP growth for the rest of the year and into 2011, although most believe the economy will avoid a serious second dip.

Other data out yesterday were mixed. Factory orders rose in July by 0.1 per cent, having fallen in June, but the recovery was weaker than expected. Pending home sales, though, came in better than forecast, rebounding 5.2 per cent in July, according to the National Association of Realtors, suggesting some stabilisation in the housing market.