Aug. 29, 2013 at 8:54 AM ET
The number of Americans filing new claims for unemployment benefits fell as expected last week, suggesting a strengthening in job gains in August after a slight pullback the prior month.
Meanwhile, the U.S. economy accelerated more quickly than expected in the second quarter thanks to a surge in exports, bolstering the case for the Federal Reserve to wind down a major economic stimulus program.
Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 331,000, the Labor Department said on Thursday. Claims for the prior week were revised to show 1,000 more applications received than previously reported.
Economists polled by Reuters had expected first-time applications to fall to 332,000 last week. A Labor Department analyst said no states had been estimated and there was nothing unusual in the state-level data.
The four-week moving average for new claims, which irons out week-to-week volatility, ticked up 750 to 331,250, still holding at a level economists associate with a strengthening labor market.
Initial claims have not strayed too far from the 330,000 level since mid-July, bolstering expectations of an acceleration in the pace of employment gains in August.
Hiring moderated a bit in July and a pickup this month could cement expectations the Federal Reserve will announce a scaling back of its monthly $85 billion bond-buying program at its Sept. 17-18 policy meeting. It has been making the monthly purchases to hold down interest rates.
The U.S. central bank has said it plans to start tapering the purchases later this year, but would be guided by economic data. July data on home building, industrial production and durable goods orders have missed market expectations, which economists say would only affect the size of cutbacks.
The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid fell 14,000 to 2.99 million in the week ended Aug. 17.
Gross domestic product grew at a 2.5 percent annual rate, according to revised estimates for the period that were released by the Commerce Department. The quarter's growth rate was more than double the pace clocked in the prior three months.
The report could boost confidence that the economy is turning a corner despite government austerity measures. At the same time, a full recovery from the 2007-09 recession is probably years away as the U.S. jobless rate remains historically high at 7.4 percent.
The government had initially estimated that GDP expanded at a 1.7 percent rate in the second quarter. But recent data on trade showed that exports climbed during the period at their fastest pace in over two years.
The government also said data from retailers showed that businesses had restocked their shelves at a faster pace in the April-June period than initially estimated.
Economists polled by Reuters had forecast the economy growing at a 2.2 percent pace.
Many economists expect the economy will accelerate further in the second half of the year as austerity measures begin to weigh less on national output.
That drag was evident in the second quarter, when spending contracted at all levels of government. Indeed, Thursday's data showed the economic drag from spending cuts was greater in the second quarter than initially estimated.
Still, the data could make officials at the U.S. central bank more confident in their plan to begin reducing monthly bond purchases later this year. The program has reduced borrowing costs and helped spark a recovery in the nation's housing market, which collapsed during the recession.
In the second quarter, investments in housing accounted for nearly a fifth of the economy's growth during the period.
However, other reports have suggested that housing began to look more shaky toward the end of the quarter. Expectations that the Fed could reduce bond buying as early as next month have driven mortgage rates sharply higher since May.
The bond-buying program is one of America's last major economic stimulus programs, as the federal government's fiscal austerity began dragging on the economy in late 2010.
In the second quarter, higher taxes appeared to hold consumers back. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, slowed to a 1.8 percent growth pace after rising at a 2.3 percent rate in the first quarter.
Copyright 2013 Thomson Reuters.