New claims for jobless benefits fell last week, while orders for long-lasting manufactured goods excluding transportation rose in May, offering hope the fragile economic recovery remained intact.
Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 457,000 in the week ended June 19, the Labor Department said on Thursday.
The decline in claims was the largest since the week ended April 17. Analysts polled by Reuters had expected claims to fall to 460,000.
Separately, durable good orders excluding transportation rose 0.9 percent last month, the Commerce Department said. However, overall durable goods orders fell 1.1 percent, the first decline in six months, dragged down by the volatile aircraft component.
It takes away some concern at the margin. We're still in a fragile economy, but this probably isn't evidence of a double-dip recession, said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut.
U.S. stock index futures pared losses after the data, while Treasury debt prices trimmed gains. The U.S. dollar gave up some gains versus euro.
Recent data such as retail sales, employment and home sales have pointed to a moderation in the recovery pace, but analysts see little risk of the economy sliding back into recession.
The recovery from the longest and deepest downturn since the 1930s is being hamstrung by stubbornly high unemployment.
A Labor Department official described the jobless claims report as fairly straight forward and said the prior week's claims had been pushed up by technical factors.
The four-week moving average of new claims, considered a better measure of underlying labor market trends, fell 1,500 to 462,750. Claims continue to be stuck at stubbornly high levels, implying unemployment will stay elevated for a while.
Businesses are cautious about hiring, nervously watching the economic recovery.
On Wednesday, the Federal Reserve said the labor market was gradually improving, but noted that employers remained reluctant to add employees. The U.S. central bank left overnight lending rates in a zero to 0.25 percent range and renewed its ultra low interest rate pledge.
A near 10 percent unemployment rate is weighing on President Barack Obama's popularity, and unhappiness with the economy could prove costly to the Democratic Party in November's congressional elections, with voters in an anti-incumbent and anti-Washington mood.
The number of people still receiving benefits after an initial week of aid fell 45,000 to 4.55 million in the week ended June 12, the Labor Department said. The level was in line with market expectations for 4.56 million.
The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, slipped to 3.5 percent in the June 12 week from 3.6 percent.
In sign the recovery remains on track, an indicator of business investment, orders of non-defense capital goods excluding aircraft, rebounded 2.1 percent in May, after a 2.7 slide in April, the durable goods orders report showed.
Inventories of manufactured durable goods were up 0.8 percent, the fifth monthly rise in a row. Unfilled orders rose 0.2 percent after a 0.4 percent gain in April.
(Reporting by Lucia Mutikani and Mark Felsenthal; Editing by Neil Stempleman)