Some Hints of Optimism in Economic Data

In addition, a private manufacturing index rose more than expected.

But construction spending fell a sharp 1.3 percent in July, with big declines in government projects, and productivity narrowed in the second quarter, making Thursday another day of mixed signals on the state of the United States economy.

The Labor Department said on that weekly applications fell 12,000 to a seasonally adjusted 409,000 last week, the first decline in three weeks.

A strike by Verizon workers drove applications higher during the previous two weeks. The strike ended last week and is no longer affecting applications.

Applications have fallen from an eight-month high of 478,000 in April. Still, they typically need to drop below 375,000 to signal sustainable job growth, analysts say. They haven’t been at that level since February.

Meanwhile, the Institute for Supply Management’s index indicated that manufacturing expanded again in last month, its 25th consecutive monthly increase. Analysts surveyed by FactSet had expected a contraction.

Although the index fell to 50.6 last month from 50.9 in July, a level above 50 signals that the economy is expanding.

In a separate report, the Labor Department said worker productivity fell this spring in the United States at a faster pace than previously estimated, while labor costs were rising at a faster clip. Both developments could pose threats to a fragile economic recovery.

Productivity declined at an annual rate of 0.7 percent in the April-June period, a bigger drop than the 0.3 percent decline reported a month ago. Labor costs rose at an annual rate of 3.3 percent, faster than the 2.4 percent increase originally reported.

The changes reflected downward revisions made last week to overall economic growth that showed the economy’s output barely growing in the spring. Declining productivity, if it persists for a prolonged period, would represent a serious economic threat, while rising labor costs would cut into corporate profits.

Article source: http://www.nytimes.com/2011/09/02/business/economy/us-jobless-claims-dip-after-verizon-strike-ends.html?partner=rss&emc=rss