US factories shrugged off weakness in the global economy during November as manufacturing activity rose to its highest level in five months, giving a fresh sign that the American economy could be accelerating. Also pointing to stronger growth, US construction spending increased more than expected in October.
"We could see an acceleration in the momentum ... in the manufacturing sector and the economy more generally," Millan Mulraine, a macro strategist at TD Securities in New York, said on Thursday following the data's release. The Institute for Supply Management said its index of national factory activity rose to 52.7 from 50.8 the month before. The reading topped expectations of 51.5, according to a Reuters poll of economists.
Separately, the Commerce Department said construction spending rose 0.8 percent to an annual rate of $798.53 billion. However, new claims for unemployment insurance rose last week in a reminder that any healing in the country's battered labour market will be slow. Initial claims for state unemployment benefits climbed to a seasonally adjusted 402,000 from an upwardly revised 396,000 in the prior week, the Labour Department said on Thursday.
Initial claims below the 400,000 mark are normally seen as pointing to some healing in the jobs market. The US economy has gathered steam in the second half of the year thanks to robust consumer spending and factory output, with the wider economy expanding at a 2 percent annual rate in the third quarter. It could accelerate in the fourth quarter.
Retailers that stuck with their same old holiday season strategies were dealt a blow in November, while earlier hours and bigger promotions last weekend, which traditionally kicks-off the holiday shopping season, were the keys to success for other chains.
Total retailer sales over the weekend, reached $52.4 billion, up from $45 billion last year, according to the National Retail Federation.
Overall, November sales at stores open at least a year rose as they were expected to, though there were clear winners and losers during a critical month for the retail industry. Still, economists see a risk of a US recession next year, especially if lawmakers allow extended unemployment benefits and a payroll tax cut to expire at the end of 2011. In the US labour report, the four-week moving average of claims, a closely followed measure of labour market trends, increased 500 to 395,750. Economists polled by Reuters had forecast weekly claims at 390,000.
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