The number of US workers filing new claims for jobless aid fell last week and factory activity in March hit its highest level in more than 5-1/2 years, pointing to a continued expansion in the economy. The data on Thursday came a day before the release of the government's closely watched employment report for March, which is expected to show nonfarm payrolls grew only for the second time since the recession started in December 2007.
-- Initial jobless claims fall 6,000 last week
-- Four-week average of claims hits 1-1/2 year low
-- Continuing claims lowest since December 2008
-- Manufacturing activity highest in over 5-1/2 years
The labour market has lagged the manufacturing-led economic recovery from the worst downturn since the 1930s. Job growth is key to sustaining that recovery when the impetus from rebuilding of inventories disappears later this year. Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 439,000, the Labour Department said. Markets had expected claims to dip to 440,000. The data has no impact on Friday's job figures because it falls outside the survey period for the March employment report.
The four-week moving average of new claims dropped 6,750 to 447,250, the lowest level since September 2008. Separately, the Institute for Supply Management's index of national factory activity rose to 59.6, the highest since July 2004, from 56.5 in February. That was above market forecasts for 57.0.
A reading above 50 indicates expansion in manufacturing. However, a measure of employment slipped slightly. The median projection from the 20 economists who have forecast payrolls most accurately over the past year predicts 200,000 jobs were created in March. While claims for unemployment benefits have resumed their downward trend after stalling early this year, they are still above the 400,000 threshold that analysts say will signal labour market stability. Many analysts still see job growth, however.
The number of people still receiving benefits after an initial week of aid fell in the week ended March 20 to its lowest since December 2008. The number of people on extended employment benefits rose, however. The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, was steady at 3.6 percent for a fifth week.
Separately, planned layoffs at US firms rose last month, although planned job cuts for the first quarter were down sharply from a year ago, outplacement consultants Challenger, Gray & Christmas Inc said. While areas such as manufacturing are thriving, continued weakness in the construction sector is holding back the economy's growth potential.
US construction spending fell for a fourth straight month during February to the slowest rate in nearly 7-1/2 years as activity softened in every major sector from homebuilding to public construction projects, a Commerce Department report showed. Overall construction spending fell 1.3 percent to a seasonally adjusted annual rate of $846.23 billion following a revised 1.4 percent decline in January that previously was reported as a 0.6 percent decrease. The February drop exceeded the 1 percent decline that economists surveyed by Reuters had forecast.
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