June 24, 2021

Unemployment Claims Drop, but Economic Growth Is Slower

Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 364,000, the Labor Department said on Thursday. That was the lowest number since April 2008.

In other economic news, a survey released on Thursday showed that consumer sentiment rose in December to its highest level in six months. And a gauge of future economic activity increased more than expected in November because of a sharp pickup in new permits to build homes.

But revised data showed that the nation’s economic growth was slower than previously estimated in the third quarter because of a sharp drop in health care spending. Stronger business investment and a fall in inventories pointed to a pickup in output in the current period.

The United States economy has shown signs it is gaining steam as the year ends, although the recovery still could be derailed by any big flare-up in Europe’s debt crisis.

JOBLESS CLAIMS The decline in jobless claims last week was a more positive development than expected. Economists polled by Reuters had forecast claims rising to 375,000 last week.

The previous week’s jobless claims data was revised up to 368,000 from the previously reported 366,000.

The level of unemployment claims has fallen in recent weeks, and analysts say fewer layoffs means employers are probably more likely to hire.

Economists at Goldman Sachs said earlier in the week that weekly claims below 435,000 pointed to net monthly gains in jobs. Their research was based on figures available through October.

In November, the jobless rate dropped to a two-and-a-half-year low of 8.6 percent. The Federal Reserve last week acknowledged an improvement in the jobs market, but said unemployment remained high and left the door open for further measures to help the economy.

ECONOMIC OUTPUT In a report released on Thursday, the Commerce Department said in its final estimate that gross domestic product grew at a 1.8 percent annual rate in the July-September quarter, down from the previously estimated 2 percent.

Economists had expected growth to be unrevised at 2 percent. Though spending on health care dropped by $2.2 billion, spending on durable goods was stronger than previously estimated, indicating that the household appetite to consume remained healthy.

A previous report said that health care spending increased at a $19.7 billion rate. Health care spending subtracted about 0.1 of a percentage point from the G.D.P. change in the final revision, whereas in the previous estimate, it added 0.61 of a percentage point to growth.

Despite the downward revision, the third-quarter growth is still a step up from the April-June period’s 1.3 percent pace. Part of the pickup in output during the last quarter reflected a reversal of factors that held back growth earlier in the year.

A jump in gasoline prices weighed on consumer spending earlier in the year, and supply disruptions from Japan’s big earthquake and tsunami in March curbed auto production.

The government revised consumer spending to a 1.7 percent growth rate from 2.3 percent because of adjustments to health care services, in particular nonprofit hospitals.

Spending on durable goods was, however, revised up to a 5.7 percent pace from 5.5 percent.

Business inventories dropped by $2 billion, which sliced 1.35 percentage points from G.D.P. growth. Inventories previously were estimated to have declined $8.5 billion.

The drag from inventories was offset by strong business spending, which increased at a 15.7 percent rate, instead of 14.8 percent.

CONSUMER SENTIMENT In a fresh sign of economic hope, a survey released Thursday showed that Thomson Reuters University of Michigan’s final reading on the overall index on consumer sentiment rose to 69.9 points in December from 64.1 the previous month.

It topped the median forecast of 68 points among economists polled by Reuters and beat December’s preliminary figure of 67.7.

Over all, real spending is expected to increase by 1.8 percent in 2012 as long as action is taken on extending the payroll tax cut, the survey said.

The survey’s barometer of current economic conditions rose to 79.6 points from 77.6, while the survey’s gauge of consumer expectations gained to 63.6 points, from 55.4. All three indexes were at their highest level since June.

“I think it’s a reflection of improving job statistics, we’re seeing an increase in retail sales and even housing seems to be going up,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “A lot of the key bookends of our economy appear to be really strengthening and that’s supporting confidence.”

LEADING INDICATORS A report released Thursday by the Conference Board suggested that economic momentum could increase by spring.

The private firm’s Leading Economic Index rose 0.5 percent in November to 118 points, following a 0.9 percent increase in October. It was the seventh consecutive monthly gain in the index.

“The risk of an economic downturn in the near term has receded,” said Ataman Ozyildirim, an economist at the Conference Board.

Ken Goldstein, another Conference Board economist, said the index suggested the economy could pick up steam by spring.

Analysts polled by Reuters had expected the index to rise 0.3 percent in November.

Article source: http://feeds.nytimes.com/click.phdo?i=b043ce80eb59335e8618bf879b992e1f

Speak Your Mind