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JOBLESS claims rise as labor market continues to struggle


WASHINGTON (AP) _ The number of Americans filing new claims for state unemployment insurance rose last week after falling for three weeks in a row. The jump provided fresh evidence that the struggling economy continues to take a toll on workers.

The Labor Department reported Thursday that new applications for jobless benefits for the workweek ending June 30 increased by a seasonally adjusted 7,000 claims to 399,000, the highest point since the middle of June.

The week before, claims fell by 12,000.

The Federal Reserve has cut interest rates six times this year to boost economic growth. The most recent cut, by a quarter-point, came last week. Each of the other five were by half-points.

The more stable four-week moving average of jobless claims, which smoothes out week-to-week fluctuations, declined last week to 407,500, the lowest level since the end of May.

The economic slowdown has been hard on companies struggling with slumping demand. To cope, they have sharply cut production and laid off workers.

Many economists are predicting that the nation's unemployment rate will rise to 4.6 percent in June from 4.4 percent in May, and that businesses will eliminate another 25,000 jobs. The government will release employment information on Friday.

While there's been a round of encouraging economic data in recent weeks, depicting an economy that may be on the mend, some economists still worry that risks remain.

The biggest fear is that the labor market will seriously weaken, causing consumers to curtail their spending and tip the economy into recession.

Most economists believe the recently ended second quarter will mark the bottom point for the economy since it became stuck in low gear a year ago. But they are hopeful that the Fed's aggressive credit-easing campaign, along with Congress' tax-cut refunds of up to $600 will fuel economic growth later this year.

Thursday's report also showed that for the workweek ending June 23, 21 states and territories reported increases in claims and 31 reported decreases. The information lags a week behind the national figures and is not seasonally adjusted.

New Jersey had the biggest increase in claims, up by 5,791 due to layoffs in businesses including communications, transportation, public utilities and manufacturing.

In Massachusetts, claims rose by 2,356 because of layoffs as schools closed for the summer. California reported an increase of 2,145 claims from layoffs in the motion picture and service industries.

Missouri reported the biggest drop in claims, by 2,819, due to fewer layoffs in transportation, communications and public utilities.
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