Growth in the US manufacturing sector picked up in August, a sign the economy is resisting the global economic chill although a rise in new jobless claims last week pointed to a still-sluggish labour market. Financial information firm Markit said on Thursday its "flash" index for US manufacturing edged up a half point to 51.9 in August. A reading above 50 indicates expansion.
That was still some of the weakest growth in the factory sector in the last three years, reinforcing the view that US economic growth will pick up in the second half of the year but remain lacklustre. "The US economy is slowly turning the corner," said Robbert Van Batenburg, head of global research at Louis Capital Markets in New York.
The reading, based on a survey of purchasing managers, beat expectations and rose despite sluggish overseas demand for American goods. Still, the modest improvement was not enough to dissuade investors' bets on more monetary stimulus from the Federal Reserve. US government debt prices rose, although stocks slumped on Wall Street amid signs of further weakness in the global economy.
Many economists think the Fed could unveil a new bond buying program to prop up economic growth as soon as its next meeting September 12-13, although an improvement in hiring this month could make that less likely. The Labour Department said initial claims for state unemployment benefits rose 4,000 last week to a seasonally adjusted 372,000. Minutes from the Fed's July 31-August 1 policy review, released on Wednesday, suggested the central bank is likely to deliver another round of monetary stimulus "fairly soon" unless the economy improves considerably.
The Commerce Department said new single - family home sales edged higher in July while data from the Federal Housing Finance Agency showed home prices rose in June. "We're moving in right direction but at a slow pace," said Fred Dickson, a market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.
The four-week moving average for new claims, a measure of labour market trends, was 368,000 last week. That was a slight increase from the prior week, but still 2.1 percent lower than in the second week of July. The government will release its employment report for August on September 7, and policymakers at the Federal Reserve will scrutinise the data for signs the economy is improving.