New Jobless Claims Rise in Week
The U.S. economy seems to be on firm footing, reports showed Thursday, with strong consumer spending, moderate inflation and robust activity in Midwest factories.
But a surprise jump in weekly jobless claims dimmed some of the optimism on the eve of the monthly employment report.
The Labor Department said first-time jobless claims last week rose 20,000 to 350,000, whereas analysts had expected a decline. The four-week moving average, which smooths out weekly fluctuations, edged up to 336,000 from 327,500 the previous week.
March nonfarm payrolls, due today, are expected to show 220,000 net new jobs created after 262,000 in February.
Inflation concerns were lessened Thursday by news of moderation in a price index that is watched by Federal Reserve Chairman Alan Greenspan.
The Commerce Department said its price index for consumer spending climbed 0.3% in February after rising 0.2% in January.
But the “core” index, which strips out volatile food and energy prices, slowed to a 0.2% increase in February after a 0.3% rise in January. The core index is a Greenspan benchmark for inflation in the economy.
The core index was up 1.6% in February from a year earlier, within the Fed’s 2005 forecast of 1.5% to 1.75%, analysts said.
Investors are more alert for signs of rising prices after the Fed warned last week that it was concerned about inflation pressures. A sustained rise in inflation could force the Fed to tighten credit at a faster pace.
Also Thursday, the Commerce Department said consumer spending advanced 0.5% in February, matching analysts’ expectations, from an upwardly revised 0.1% in January.
Spending was buoyed by solid retail sales and a sharp rebound in expenditures on durable goods such as cars, government data showed.
Personal income rose 0.3% in February, the Commerce report said. Analysts had forecast that personal income would climb 0.4% after it slumped 2.5% in January, when the numbers were distorted because of a huge Microsoft Corp. dividend payment in December.
News from the manufacturing sector was mixed. The Chicago purchasing management index, a measure of manufacturing activity in that region, rose to 69.2 in March, the highest level since 1988, a new report showed.
But the robust performance from the Midwest was somewhat at odds with the tone of national February factory orders.
The Commerce Department reported a 0.2% rise in U.S. factory orders, which was helped by demand for civilian aircraft. However, orders actually fell 0.1% when all of transportation was stripped away.
“The economy is good right now; last year it was great,” said William Zollars, chief executive at Yellow Roadway Corp., the biggest U.S. trucker. “It’s pretty tough to compare to last year, but things still look pretty solid.”
