Economy a ‘muddle’ with high jobless claims, weak factory growth
Home building permits are up, but as far as other economic indicators such as jobless claims and manufacturing growth go, the U.S. economy is looking like it’s stuck in quicksand.
An index measuring the outlook for the next three to six months from private research group the Conference Board rose 0.3% in May after sliding 0.1% in April.
But building permits, which rose to nearly a four-year high last month, drove most of the increase. Poor consumer sentiment and weak stock prices, along with a shorter manufacturing work week, kept the gauge from going higher.
“Economic data in general reflect a U.S. economy that is growing modestly, neither losing nor gaining momentum,” said Ken Goldstein, an economist at the Conference Board. “The result is more of a muddle-through. Continued headwinds, both domestic and foreign, make further strengthening of the economy difficult.”
Blazing economic expansion in Asia has cooled. Europe is struggling with indecision over Greece, concerns about Italy and Spain, and resistance from Germany.
In June, U.S. manufacturing grew at its slowest pace in nearly a year, according to preliminary data from research group Markit. Although the index shows expansion at 52.9, it’s down from a 54 level in May.
Foreign demand for American-made goods faded and factory hiring lost steam, a cause for concern in a sector that many economists have credited with shouldering the economic recovery.
Last week, the number of Americans filing initial claims for jobless claims barely budged, slipping by 2,000 to a seasonally adjusted 387,000. But the previous week had been revised up by the Labor Department, suggesting that the employment market may be spinning its wheels.
And the four-week moving average for new claims, which is less volatile, is at its highest point since December.
The Federal Reserve said on Wednesday that it would extend its so-called Operation Twist program to keep interest rates down through year end.
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