Jobless Claims, Factory Data Give Economy Some Shine

weekly jobless claims
Lynne Sladky/APJob seekers at a recent workshop in Davie, Fla.
By Lucia Mutikani

WASHINGTON -- 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 data add further evidence to the notion that the economy has exerted positive momentum at the start of the second quarter," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, N.C.

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, but stayed close to a 6½ 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, which 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 in March. April's reading was the highest in seven months and beat economists' forecasts for only a rise to 10.

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 increased and workers put in more hours than they did in March.

U.S. stocks were little changed as underwhelming results from tech giants Google (GOOG) and IBM (IBM) offset the fairly upbeat economic reports. Prices for U.S. Treasury debt fell and the dollar slipped against a basket of currencies.

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.

The harsh winter, combined with weak exports and stock accumulation by businesses, is expected to have cut gross domestic product to an annual growth pace of around 1.5 percent in the first quarter after a 2.6 percent rate in the October-December period.

But the economy is expected to snap back in the second quarter as the drag from the weather and inventories fades. Second-quarter GDP growth estimates range as high as a 3.6 percent pace.

Federal Reserve Chair Janet Yellen said Wednesday the economy was making "very meaningful progress", adding it was "quite plausible" it 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, suggests 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 between the March and April survey periods, which suggests an acceleration in job growth.

Job growth averaged about 195,000 a month in February and March, with the unemployment rate holding at near a five-year low of 6.7 percent during that period.

Labor market indicators such as job openings, the duration of unemployment and short-term unemployment, suggest some tightening in conditions.

The health of the labor market will most likely determine when the U.S. central bank starts raising benchmark interest rates, which it has kept near zero since December 2008.

The Fed is expected to conclude its monthly bond buying program later this year and most economists expect the first rate hike will be in the second half of 2015.

The claims report showed the number of people still receiving benefits after an initial week of aid dropped 11,000 to 2.74 million in the week ended April 5. That was the lowest level in the so-called continuing claims since December 2007.

"The ongoing improvement in continuing claims remains encouraging amid more positive labor market dynamics, suggesting that workers are not simply leaving the labor force but likely finding gainful employment," said Gennadiy Goldberg, an economist at TD Securities in New York.

-Additional reporting by Rodrigo Campos.


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27 Comments

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rcohn95038

The economy of this country will not come back, until we have a competent President for approximately 2 years, who takes the right actions, which will help businesses. The current environment is not conducive for business. The current President is the problem; he hurts business enough, that businesses will simply sit on their cash, rather than expand, and hire more Americans.

April 18 2014 at 7:53 AM Report abuse rate up rate down Reply
alfredschrader

We go through painful cycles like this. Our history is riddled with depressions and recessions.
Why ? We need a new department in our government that monitors and forecasts our economy
to suggest corrections and prevent these "events" of high unemployment, angry occupy mobs, and crippled industrial activity.
The US economy is not a magical entity, it's based on sound solid principles that have made us the economic world leading nation that we are.
We really need to be careful that we don't stiffel our own industries and instead make decisions that encourage economic growth and success.
Obviously the methods being used thus far have not been working. We need to upgrade and improve all of it.
This is America, the land of opportunity and prosperity. Lets work together.

April 18 2014 at 7:34 AM Report abuse rate up rate down Reply
rldgeruner

are you stupid? theres still 7 houses near me for sale have been for a year gas going up the govt robbing people insurance going sky high elderly cant afford to live and you iditos think its better let me know what your smoking

April 18 2014 at 7:28 AM Report abuse rate up rate down Reply
jyc925

With the so called "FREE STUFF" there is not a lot of people who want to go back to work. If more people are working it is the low paying jobs that are getting hired. The high paying jobs are getting squezzed out. This adminstration wants to have all low paying jobs so they can control everyone and everything. Why do you think they are pushing imagration ? Our country has changed so much it is getting hard to recongize it anymore. With this adminstration telling us all we can or cannot do. They certainly don't believe in the Constitution they have proven that. They have practically destroyed our military and all they do is lie to the American people. Who can ever believe what they say. Who has ruined the best health care in the world and who doesn't even know who signed up , but can throw out numbers like we are suppose to believe a liar. 2016 can't come soon enough. God Bless America and it's people !!!

April 18 2014 at 12:34 AM Report abuse +3 rate up rate down Reply
1 reply to jyc925's comment
ualfriend

What planet did you come from?

April 18 2014 at 6:18 AM Report abuse rate up rate down Reply
paddleman1928

wake up! Taxes are going up and people would rather collect unemployment forever or collect welfare rather than work

April 17 2014 at 10:00 PM Report abuse +1 rate up rate down Reply
codakarma

The economy experts and government "officials" who count numbers on the jobless need to become blue collar workers to see how much garbage these statements contain. Let them try finding working class jobs that pay a wage you can live on. I haven't been able to find solid work since my first lay off in January of 2008 after 20+ years at the same job. The experience and qualifications I have are wanted, but they want to pay wages a high school kid makes. Politicians and the companies that are in their pockets have destroyed this country.

April 17 2014 at 8:25 PM Report abuse +2 rate up rate down Reply
1 reply to codakarma's comment
ualfriend

no that would be the repubs

April 18 2014 at 6:19 AM Report abuse -1 rate up rate down Reply
leegfan

I just heard that 95% or more of the progress made in the economy has gone to the top 1-2% and the rest of us are mostly stagnating. I see little reason to celebrate. We need an increase in the minimum wage NOW. Saw a clip of a Republican defending NOT raising the MW and he said it would hurt the economy too much. That is what they say EVERY TIME there is talk of raising the MW - no matter what the economy is doing. If the economy is booming, raising the MW would stiffle the economy, if the economy is bad, a raise would kill it. It's all crap. Everytime the MW has risen, it has resulted in a better economy from the top to the very bottom.

April 17 2014 at 8:21 PM Report abuse rate up rate down Reply
hangr54

Despite Republicans

April 17 2014 at 8:15 PM Report abuse -7 rate up rate down Reply
rjen164497

What? Have you purchased Gasoline or food lately? Another Obama administration lying and the Liberal press not doing their job to queation the facts. There are fewer people working. Food and fuel prices are higher. If you can't figure it out your an idiot.

April 17 2014 at 6:12 PM Report abuse +1 rate up rate down Reply
1 reply to rjen164497's comment
camarillofats

You're the idiot. You cannot reference a single, solid, actual fact to substantiate your silly claim. In spite of republican's best efforts to prevent it, the country is climbing out of the Bush financial disaster.

April 17 2014 at 7:40 PM Report abuse -1 rate up rate down Reply
1 reply to camarillofats's comment
leegfan

You are so right.

April 17 2014 at 8:23 PM Report abuse -2 rate up rate down
larry

Anyone that believes the economy is improveing, I have some beach front property in Arizona I'll sell you. Look no further than the businesses in your neighborhood and the stock market that reflects the confidence in jobs, spending and the movement of money between customers and businesses. Obama loves to get every opportunity for photos and TV appearances and to brainwash America that things are going great but even the manipulation of data and lies are not proven facts the economy, jobs, housing and confidence in America is improveing. Seeing is believing. Obama's spewing more lies only for political gain.

April 17 2014 at 4:51 PM Report abuse +3 rate up rate down Reply
1 reply to larry's comment
chris1011

Could it be that you're the one who is on the wrong side of history? Maybe you have loser written on your forhead, which is turning others off. Anyone with half a brain has made money these last 6 years.

April 17 2014 at 6:04 PM Report abuse +1 rate up rate down Reply