U.S. Unemployment reaches 2.835 million.

Figures released by the Labor Department in Washington today reveal that number of US citizens on unemployment benefits has risen to a two and a half year high, currently at 2.835 million, the highest since September 2005.

Many economists deem this to be a further sign of a strained economy.

Initial claims were forecast to rise to 357,000 from 351,000, although the ailing job market coupled with the deepening slump in the housing market has had a marked effect on consumer spending, a view espoused by
Sal Guatieri a senior economist at BMO Capital Markets who said that a “sustained weakness in employment could deal a knock- out blow to wobbly consumers.”

The initial claims this week are at 353,000 although they have been affected by strikes by General Motors Corp.’s largest axle supplier and American Axle & Manufacturing Holdings Inc causing widespread havoc in Ohio, Indiana and Michigan.

As a result of the walk out, factories shutting down have affected almost 42,000 hourly and salaried workers.

As well as the current level of unemployment job security is still an issue and the initial jobless claims reflect weekly job losses. So far this year, weekly claims have averaged 345,500, compared with 322,000 for the whole of 2007.

Labor Department’s employment report showed that U.S. employers have unexpectedly cut jobs this month for the second month in a row, and predictions indicate that this trend will only get worse.

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