Weak Jobless Claims, Future Economic Activity Data

A gauge of future economic activity and a report on unemployment benefits signaled Thursday that the recovery likely will remain weak in the coming months.

In this photo taken Monday, Nov. 16, 2009 Ashley Anderson, front, receives a free haircut from Hair...

In this photo taken Monday, Nov. 16, 2009 Ashley Anderson, front, receives a free haircut from Hair Stylist Jonathan Williams, top right, both of Cranston, R.I., at the Wil.O Design Studio, in Cranston. Anderson received the haircut at no charge along with many others as part of a program offered by the studio to unemployed people in an effort to help them with job interviews. Anderson hopes to find work in a bakery or restaurant. The number of newly-laid off workers seeking unemployment insurance was the same last week as the previous week, a sign that the jobs market is improving at a very slow pace.(AP Photo/Steven Senne)

(AP)

The Conference Board's index of leading economic indicators rose less in October than analysts had expected. The index forecasts activity by measuring consumer expectations, building permits and other data.

And the number of newly laid-off workers seeking unemployment benefits, unchanged last week, remains above the level that would indicate the economy is adding jobs.

Together, the two reports suggested that the lack of job creation is dampening consumer expectations and prospects for an economic rebound. Uneasy consumers likely will curtail their spending, which powers about 70 percent of the U.S. economy.

New jobless claims have fallen about 22 percent since spring. But companies' reluctance to hire is weighing down the housing market — and the economy's fledgling recovery.

A separate report Thursday found that a rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure.

Driven by rising unemployment, such loans accounted for nearly 33 percent of new foreclosures last quarter. That compares with just 21 percent a year ago, when high-risk subprime loans made during the housing boom were the main reason for default.

And the proportion of homeowners with a mortgage who were either behind on their payments or in foreclosure hit a record high for the ninth straight quarter, the Mortgage Bankers Association reported.

The latest data on the economy gave investors little incentive to hold on to stocks. Major indexes tumbled about 1.5 percent Thursday, including the Dow Jones industrials, which fell about 135 points.

The Labor Department's report on jobless benefits said first-time claims amounted to a seasonally adjusted 505,000 last week. That was the same as the previous week's revised figure, and it matched analysts' expectations. A year ago, there were 533,000 initial claims.