By Lucia Mutikani
WASHINGTON -- The number of Americans filing new claims for jobless benefits fell last week and factory activity in the mid-Atlantic region accelerated in June, more evidence the economy was strengthening after a disastrous first quarter.
"The economy has improved markedly in recent months," said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan. "Signs point to continued growth in the coming quarters, and further improvement in labor market conditions."
%VIRTUAL-article-sponsoredlinks%Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 312,000 for the week ended June 14, the Labor Department said Thursday.
The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, fell 3,750 to 311,750, not far from a seven-year low touched in May.
Separately, the Philadelphia Federal Reserve Bank said its business activity index jumped to 17.8 this month, the highest level since September, from 15.4 in May. Any reading above zero indicates expansion in the region's manufacturing.
Gains were driven by a surge in new orders, as well as an increase in factory employment and working hours. There were also improvements in delivery times, shipments, and unfilled orders, which rebounded strongly from May's slump.
Upbeat Growth Picture
Another report showed a gauge of future growth rose for a fourth straight month in May.
The reports joined data on employment and the manufacturing and services sectors in painting an upbeat picture of the economy after a contraction in the first quarter.
The government said last month the economy shrank at a 1 percent annual pace, but economists say more recent data have suggested the contraction was even deeper.
But second-quarter data, including the reports on Thursday, bolstered the case the Federal Reserve made this week that the economy was bouncing back.
The central bank Wednesday slashed its 2014 growth forecast, but it further reduced the amount of money it is pumping into the economy each month through bond purchases and hinted at a slightly faster pace of interest rate increases starting in 2015.
U.S. financial markets were little moved by the data as traders continued to digest Wednesday's statement from the Fed's policy-setting committee.
The claims data covered the survey week for the government's report on June's nonfarm payrolls, which will be released in two weeks. The four-week average for claims fell 11,000 between the May and June survey periods, suggesting payroll growth probably increased from last month's gain of 217,000 jobs.
"The ongoing low levels of initial claims suggest there is a good chance that we will see another respectable advance in payrolls," said Guy Berger, an economist at RBS in Stamford, Connecticut.
Other measures such as job openings and hiring intentions by small businesses have also pointed to a healthier labor market. The economy has recovered the 8.7 million jobs lost during the recession and has enjoyed four straight months of job gains above 200,000, the strongest stretch since early 2000.
The claims report showed the number of people still receiving benefits after an initial week of aid hit its lowest level since October 2007 in the week ended June 7.
The so-called continuing claims have been trending lower, an indication that some long-term unemployed were finding work.
The unemployment rate for people collecting unemployment benefits fell to 1.9 percent in the week ended June 7, the lowest since October 2007, from 2 percent the prior week.
By Lucia Mutikani