US jobless claims, factory data give economy some shine

Apr 17 2014, 22:25 IST
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In a separate report, the Philadelphia Federal Reserve Bank said its business activity index increased to 16.6 this month from 9.0 in March. Reuters In a separate report, the Philadelphia Federal Reserve Bank said its business activity index increased to 16.6 this month from 9.0 in March. Reuters
SummaryUS Treasury prices were trading lower on the data. The dollar briefly rose to session highs against the euro, while stocks on Wall Street were little changed.

New applications for unemployment benefits held near their pre-recession levels last week and factory activity in the Mid-Atlantic region accelerated in April, painting a bright picture of the economy.

The economy is regaining its footing after a brutally cold winter and is back on track for faster growth later this year.

"The economy is stronger than you think," said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.

Initial claims for state unemployment benefits ticked up 2,000 to a seasonally adjusted 304,000 for the week ended April 12, the Labor Department said on Thursday, staying close to a 6-1/2 year low touched the prior week.

Economists had forecast first-time applications for jobless benefits rising to 315,000. The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, hit its lowest level since October 2007.

In a separate report, the Philadelphia Federal Reserve Bank said its business activity index increased to 16.6 this month from 9.0 in March. April's reading was the highest in seven months and beat economists' forecasts for only a rise to 10.0.

A reading above zero indicates expansion in the region's manufacturing, which covers eastern Pennsylvania, southern New Jersey and Delaware. There was a surge in new orders and shipments. Factory employment also jumped and workers put in more hours than they did in March.

U.S. Treasury prices were trading lower on the data. The dollar briefly rose to session highs against the euro, while stocks on Wall Street were little changed.

The reports were the latest in a series to suggest an upswing in the economy. Retail sales and industrial production were robust in March. Employment has picked up since wobbling in December and there is some inflation in the economy.

On Wednesday, Federal Reserve Chair Janet Yellen said it was "quite plausible" the economy would be back to near full employment by the end of 2016.

UPBEAT DATA

Some economists argue that the recent raft of upbeat data, especially labor market indicators, suggest there might not be a lot of slack in the economy, as policymakers believe.

"The jobless claims data also suggest the labor market may be making progress toward the Fed's labor market objective more quickly than many policymakers expect," said John Ryding, chief economist at RDQ Economics in New York.

The claims data covered the survey week for April nonfarm payrolls. Despite last week's increase, claims were down 19,000

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