Jobless claims dip, consumer spending rises

By @ibtimes on

New U.S. claims for jobless benefits dipped last week and consumer spending increased in November for a fifth straight month, reinforcing views of a solid economic growth pace in the fourth quarter.

Initial claims fell 3,000 to a seasonally adjusted 420,000, the Labor Department said on Thursday, matching economists' expectations.

A separate report from the Commerce Department showed spending rose 0.4 percent after increasing by an upwardly revised 0.7 percent in October.

Economists polled by Reuters had expected spending, which accounts for about 70 percent of U.S. economic activity, to rise 0.5 percent last month after a previously reported 0.4 percent gain in October.

It hasn't been such a bad year for the economy -- we think it will grow around 2.5 percent this year and 3.5 percent next year. Unfortunately, it's been a jobless recovery, said Michael Woolfolk, a senior currency strategist at BNY Mellon in New York.

U.S. Treasury prices fell slightly after the data, while stock index futures edged lower. The dollar held losses against the yen, but maintained gains versus the euro.

In another report, the Commerce Department said orders for long-lasting manufactured goods excluding transportation increased 2.4 percent, the largest increase since March, after a 1.9 percent drop in October.

But overall orders dropped by a larger-than-expected 1.3 percent last month, dragged down by a plunge in bookings for civilian aircraft and motor vehicles.

Durable goods orders were reassuring in that we saw a manufacturing plateau over the summer and while the number released today was not strong, at least it showed some resilience in terms of capital goods orders apart from aircraft, said Pierre Ellis, a senior economist at Decision Economics in New York.

The reports were the latest in a series to suggest growth accelerated in the fourth quarter. The economy grew at a 2.6 percent annualized pace in the third quarter and many forecasters expect gross domestic product to expand at a 3 percent to 3.5 percent pace in the current quarter.

The spending report also showed the Federal Reserve's preferred measure of consumer inflation -- the personal consumption expenditures price index, excluding food and energy -- rose 0.1 percent after being flat for four straight months.

In the 12 months through November, the core PCE index rose 0.8 percent, the same margin as in October and still the smallest year-on-year gain since records started in 1960.

Spending was supported by a 0.3 percent increase in incomes, which was slightly more than the 0.2 percent rise that economists had expected. Incomes rose 0.4 percent in October. Consumers also dipped into their savings to fund purchases.

Spending adjusted for inflation rose 0.3 percent after advancing 0.5 percent in October. The seventh straight month of gains bolstered views the spending pace gathered momentum in the current quarter after growing at a 2.4 percent rate in the July-September period.

The saving rate slipped to 5.3 percent last month, the smallest since March, from 5.4 percent in October. Savings dropped to $614.8 billion, the lowest level since March. (Reporting by Lucia Mutikani and Emily Kaiser; Additional reporting by Ellen Freilich in New York; Editing by Andrea Ricci)

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