While other data on Thursday showed home sales at a 1-1/2 year low
in February, the tight stock of houses on the market that has
constrained sales eased for a second straight month, opening the
door wider to would-be homeowners.
"Much of the weakness that we have seen is weather-related and what
we are seeing now as the impact dissipates is a much brighter
outlook for the U.S. economy," said Millan Mulraine, deputy chief
economist at TD Securities in New York.
Initial claims for state unemployment aid increased 5,000 to a
seasonally adjusted 320,000 last week, the Labor Department said.
The rise, which was smaller than economists had expected, kept
claims close to the three-month low hit in the prior week.
A four-week moving average of new claims, which cuts volatility to
provide a better gauge of underlying conditions, hit its lowest
level in more than three months.
Federal Reserve Chair Janet Yellen on Wednesday said the unusually
cold and snowy winter played a big role in disrupting economic
activity, and she suggested a rebound was coming.
The latest batch of data added to a recent run that has hinted that
a bounce back may be building.
Stocks on Wall Street pushed higher on the data, while prices for
U.S. government debt fell marginally. The dollar rose against a
basket of currencies.
Last week's claims data covered the period for the government's
March nonfarm payrolls survey. Claims fell between the February and
March survey periods, suggesting the survey will point to further
improvement in job growth this month.
"The recent level of claims seems to be pointing to a reduction in
layoffs and possibly a very strong March employment report. It also
points to a decline in the unemployment rate," said Joel Naroff,
chief economist at Naroff Economic Advisors in Holland,
Pennsylvania. The government will issue its March employment report
on April 4.
MID-ATLANTIC FACTORIES HUM
In a separate report, the Philadelphia Federal Reserve Bank said its
business activity index rebounded to 9.0 in March from -6.3 in
February. Any reading above zero indicates expansion in the region's
The report, which covers eastern Pennsylvania, southern New Jersey
and Delaware, showed a rebound in new and unfilled orders at
factories in the region. Shipments also bounced back, but
inventories fell. Employers opted to increase hours for existing
workers rather than expand payrolls.
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"The underlying trend in manufacturing activity has not changed
significantly despite volatility at the start of the year, and we
continue to expect a pickup in manufacturing activity growth in
2014," said Cooper Howes, an economist at Barclays in New York.
Though sales of previously owned homes fell again in February there
is optimism they will pick up as better weather returns.
The National Association of Realtors said existing home sales
slipped 0.4 percent to an annual rate of 4.60 million units. That
was the lowest level since July 2012.
While the weather has hampered sales, a run-up in mortgage rates and
prices has also taken a toll.
In addition, a dearth of listed properties has given buyers few
options. But last month the supply rose, reaching 5.2 months' worth,
the highest in nearly a year.
"Sales are being impacted by lower inventory levels, rising prices
and interest rates," said Bill Banfield, vice president at Quicken
Loans in Detroit. "With improving weather conditions and a drop in
interest rates in January, I expect to see more buyers and sellers
in the coming months."
The 30-year fixed mortgage rate has dropped from a peak of 4.49
percent in September to about 4.30 percent in February, but it is
still a full percentage point higher than it was a year ago.
The median price for a previously owned home rose 9.1 percent in
February from a year earlier.
(Reporting by Lucia Mutikani; additional reporting by Margaret
Chadbourn and Rodrigo Campos; editing Andrea Ricci)
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