Upbeat U.S. economic data signals second quarter GDP rebound
The number of Americans filing for unemployment aid fell from a 14-month high last week, the latest sign that the economy was regaining speed after stumbling in the first quarter.
Another report on Thursday showed factory activity in the mid-Atlantic region contracted further in May, although manufacturers continued to anticipate a pickup in activity over the next six months.
Initial claims for state unemployment benefits declined 16,000 to a seasonally adjusted 278,000 for the week ended May 14, the Labor Department said. That was the biggest drop since February and snapped a three-week string of increases.
Claims have now been below 300,000, a threshold associated with a strong job market, for 63 straight weeks, the longest stretch since 1973.
The claims report added to data on retail sales, housing starts and industrial production in painting an upbeat picture of the economy at the start of the second quarter. Gross domestic product growth braked sharply to a 0.5 percent annualized rate in the January-March period.
The steady stream of firmer economic reports came amid signs that the Federal Reserve is moving closer to raising interest rates again. Minutes from the U.S. central bank’s April 26-27 policy meeting, published on Wednesday, showed most officials considered it appropriate to raise rates in June if data continued to point to an improvement in second-quarter growth.
The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade.
MANUFACTURING CONSTRAINED
In a separate report, the Philadelphia Federal Reserve said its business conditions index fell to minus 1.8 this month from a reading of minus 1.6 in April. The index has registered a negative reading in eight of the last nine months.
