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 Coming on the heels of fairly bullish data on retail sales and
industrial production, Thursday's reports also hinted job growth may
be picking up slightly.
"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, North Carolina.
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, but stayed close to a 6-1/2 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 9.0 in
March. April's reading was the highest in seven months and beat
economists' forecasts for a rise to 10.0.
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 earnings results
from tech giants Google and IBM offset the fairly upbeat economic
reports. Prices for U.S. Treasury debt fell and the dollar was flat
against a basket of currencies.
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 on 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.
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"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 per month in February and
March, with the unemployment rate holding at near a five-year low of
6.7 percent over 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.
(Reporting by Lucia Mutikani; additional reporting by Rodrigo Campos
in New York; editing by Andrea Ricci and Paul Simao)
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