Loading...
See More

US economy trudges along

May 25 2012 08:29 Reuters

Related Articles

'Fiscal cliff' could derail US recovery

US unemployment falls to 8.1%

Inflation threat keeps Fed in check

Manufacturing data boost US stocks

Fed officials agree: no more easing

Job disability headache

 

Washington - The number of Americans filing new claims for jobless benefits dipped last week, indicating the economy is plodding along even though headwinds from Europe cut into US factory activity growth this month.

The data on the US economy on Thursday was a bit lackluster, but it showed the recovery remained resilient even with growth in China slowing and the eurozone edging toward recession.

"We are growing at a moderate pace of 2 to 2-1/4 percent, but we have some headwinds that are starting to assert themselves, particularly coming from Europe," said Paul Edelstein, an economist at IHS Global Insight in Lexington, Massachusetts.

Initial claims for state unemployment benefits slipped by 2 000 to a seasonally adjusted 370 000, the Labour Department said. The four-week moving average, considered a better measure of labour market trends, also fell to 370 000, dropping by 5 500.

Although claims have been little changed in the past four weeks, they remain below levels hit in mid-April. That suggests some improvement in the pace of job creation this month after April's disappointing 115 000 gain in nonfarm payrolls.

Europe's festering debt problems and a cooler pace of activity in China have started to hurt American factories.

In a separate report, US manufacturing growth tapered off in May, according to financial information services firm Markit. Its US "flash" manufacturing Purchasing Managers Index fell to a reading of 53.9 this month, a three-month low, from 56.0 in April.

Any reading above 50 indicates expansion; the data showed the factory sector has enjoyed a 32-month growth streak.

Markit chief economist Chris Williamson attributed the moderation in activity to a softening in exports due to the deteriorating economic situation in Europe and the Chinese slowdown.

Several European countries, including Britain and Spain, have already tumbled into recession, while recent economic indicators have shown that China's days of consistent double-digit growth have come to an end.

A third report from the Commerce Department showed new orders for durable goods rose 0.2% in April after dropping 3.7% in March.

Orders for durable goods, which are designed to last at least three years and range from toasters to aircraft, were lifted by demand for transportation equipment.

But orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, fell 1.9% in April after dropping 2.2% in March.

The durable goods report, however, is notoriously volatile, and the non-defense capital goods category tends to fall in the first month of each quarter.

"The good news is that weaker global growth is not yet leading to a collapse in durable goods orders in the United States," said Scott Anderson, a senior economist at Wells Fargo Securities in Charlotte, North Carolina. "On a relative basis, US durable orders are holding up fairly well, considering the substantial headwinds."

No determination

Some retailers are feeling the pinch from slowing global demand. High-end jeweler Tiffany & Co on Thursday cut its forecast for both sales and profits for its current fiscal year ending in January 2013, blaming cooling growth in key markets like China.

But retailers like warehouse club operator Costco Wholesale Corp, which reported an 8% rise in quarterly sales on Thursday, have notched gains as budget conscious Americans seek to save money on groceries.

Most US stocks ended higher on Thursday, while government bond prices drifted lower. The dollar rose against a basket of currencies.

Though jobless claims have barely budged over recent weeks, they have offered no signs that the labor market is worsening.

The number of people still receiving benefits under regular state programs after an initial week of aid fell by 29 000 to 3.26 million in the week ended May 12.

This so-called continuing claims data covered the week for the household survey from which the US unemployment rate is derived. The jobless rate dropped to 8.1% in April from 8.2% in March, mostly because more people gave up the hunt for work.

"Labour market growth remains positive. We expect the unemployment rate to remain unchanged at 8.1%," said Joseph LaVorgna, chief US economist at Deutsche Bank in New York.

The government releases its May employment report on June 1.

us economy
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

Retailers of any shape and size can now unlock the power of mobile transacting.
 
 

Thirty and still single? There’s hope!

Are you thirty and still single, without even a hint of a prospect on the horizon? Then read this!

 
 

Men24.com

SA’s Playboy Playmate of the year in action!
12 lies everyone accepts as fact
Hottie of the day: Charlotte
Breakup text goes viral and it’s hilarious!

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...