(Reuters) – The number of Americans filing new claims for jobless benefits tumbled to a 15-year low last week and consumer spending rose in March, signs the economy was regaining momentum after stumbling badly in the first quarter.
The economic outlook was brightened further by another report on Thursday showing a solid increase in wages in the first quarter, which should keep the Federal Reserve on track to raise interest rates this year.
“This morning’s reports all point to an economy that is doing a lot better than the near-stagnation in first-quarter GDP suggests,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.
Initial claims for state unemployment benefits fell 34,000 to a seasonally adjusted 262,000 for the week ended April 25, the lowest reading since April 2000, the Labor Department said.
Though the decline, which far exceeded Wall Street’s expectations for a drop to 290,000, likely exaggerates the labor market’s health, it bolstered views that March’s sharp moderation in job growth was probably an aberration.
Separately, the Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.4 percent last month as households stepped up purchases of big-ticket items like automobiles.
The increase followed a 0.2 percent gain in February and indicated that consumer spending picked up momentum at the end of the first quarter, which bodes well for consumption in the April-June period.
While that should boost growth in the second quarter, the rebound in economic activity could be crimped by an inventory overhang, a strong dollar and ongoing spending cuts in the energy sector, which has been hit by lower oil prices.