Initial claims for state unemployment benefits fell 37,000, to 391,000, the Labor Department said, well below economists’ expectations of 420,000. But the department cautioned that the way it adjusted the data for seasonal fluctuations might have overstated the improvement.
Separately, the Commerce Department said the nation’s gross domestic product grew at an annual rate of 1.3 percent in the second quarter instead of the previously reported 1 percent. Consumer spending and export growth were both stronger than estimated.
“When you connect these data points together, they indicate a very tepid recovery. We are still experiencing positive growth, which is better than we feared a few months ago,” said Paul D. Ballew, chief economist at Nationwide in Columbus, Ohio.
The cautious optimism generated by Thursday’s data was tempered somewhat by a report showing that the housing sector remained weak last month.
A survey of chief executives in the United States released on Thursday by the Business Roundtable showed that their views of the economy’s prospects deteriorated in the third quarter, with the number who expected to cut jobs roughly doubling.
The drop in initial claims for unemployment benefits took them below 400,000 for the first time since early August. The department, however, said the labor market’s weakness in recent years might have led the model it uses to seasonally adjust the data to overstate last week’s drop.
The decline also reflected the fading impact of Hurricane Irene, which caused claims to spike in the week ended Sept. 10.
Still, the total number of unemployed continuing to claim benefits after an initial week of aid fell to 3.73 million in the week ended Sept. 17 from 3.75 million a week earlier.
The Sept. 17 week corresponds with the survey period for the Labor Department’s household employment measure, which is used to construct the national unemployment rate.
In August, the jobless rate remained at 9.1 percent, and a separate survey of employers showed that hiring had ground to a halt, which increased recession fears.
Those worries are beginning to fade. Factory output continues to expand and businesses have maintained their appetite for spending on capital goods.
“Indications are that the third quarter is doing better than previously thought. We now anticipate third-quarter real G.D.P. growth of just above 2 percent,” said Nigel Gault, chief United States economist at IHS Global Insight in Lexington, Mass.
Housing, however, remains a weak spot.
The National Association of Realtors said its index of pending home sales, based on contracts signed in August, fell 1.2 percent, to 88.6, its lowest point since April. The association said contract signings, which usually precede actual closings by a month or two, were held back by tight credit and, in the Northeast, Hurricane Irene.
With millions of Americans locked into mortgages worth more than their homes, historically low interest rates are failing to lift sales. Freddie Mac said on Thursday that the average rate on 30-year fixed-rate mortgages fell to a record low of 4.01 percent this week.
Article source: http://www.nytimes.com/2011/09/30/business/economy/second-quarter-gdp-grew-at-1-3-rate.html?partner=rss&emc=rss