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."
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.
9 Numbers That'll Tell You How the Economy's Really Doing
Employment, Factory Data Signal Strengthening Economy
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.